FINANCIAL TIPS FOR NEW OLIM, PART 1
First and foremost I want to take the opportunity to wish a big “Mazel Tov” to the thousands of freshly minted North American olim that have arrived in Israel over the last couple of months. I wish you all an easy acclimation process, and as I am sure you already know, you are definitely in good hands with the tremendous support provided by Nefesh B’Nefesh as well the Jewish Agency. As the euphoria of your Aliyah starts to wane and reality starts to sink in, you need to get yourself settled not just socially but financially as well. Here are a few tips that will make your financial aliyah a bit smoother.
New Budget
While it may seem easier to wait until you are settled before practicing fiscal discipline, it is extremely important to make a budget as soon as possible. Chances are that you will blow through the limits of this budget with the various miscellaneous expenses that will arise at the beginning of your new life in Israel. Nevertheless, getting used to living within a framework is important.
As time goes by and you get more accustomed to your new life in Israel, your budget should be flexible enough to be able to accommodate your new lifestyle. Keep in mind that while certain things in Israel are much cheaper, such as your children’s education, other things may cost more (like appliances and cars), and there is a good chance that you will be making far less money than in the old country. It may be very difficult to save at the beginning due to the unexpected expenses that often occur, but you should still try to set some kind of time frame when you can start to save.
Don’t Forget Your IRA
New olim (as well as old time immigrants to Israel) need to keep their IRAs (Individual Retirement Account) up to date. One of the most common issues I see when I meet with prospective clients is that they haven’t looked at their IRAs in years. I fully understand that tending to retirement accounts for a new immigrant is not at the top of the list of things that need to be done upon arrival. Finding a place to live, getting your children adjusted to their new surroundings and school are more urgent issues which need to be attended to. It’s just that I find that when it comes to both retirement accounts and investments abroad in general, inertia tends to sit in. Olim tend to forget about these accounts altogether, only to wake up in a decade or so to realize that the value of their account is the same as it was pre-Aliyah.
Earlier this week, I met with a couple who were perspective clients, and as we were going through their assets, I asked both of them about any retirement plans that they received while working in the US. Both of them said that they had IRAs but because they were relatively small in nature, they rarely, if ever, looked at statements. When I asked them the size of their IRA’s one answered $29,000 and the other said $68,000. I then asked each of them what the value of these accounts was when they came to Israel, and they both answered that they had roughly the same amount then as they do now.
I can’t tell you how many times I have heard similar stories. If you have a long-term savings account and you never look at it, you are doing yourself a disservice. In fact you are defeating the whole purpose of these types of accounts. While you may think that $29,000 is a small amount of money, in 15-20 years, that ‘small’ sum can — and statistically should — turn into a much larger sum. By putting off dealing with these accounts you could potentially lose tens of thousands of dollars. Again, I understand that getting children settled takes precedence but it can be costly to leave your finances unattended.
Next week I will provide some more tips to help in your Financial Aliyah, and in the meantime, take pride in the courageous decision you made to come live in Israel.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA, FSI. For more information, visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il
