Our country was built by successive waves of hungry, hard-working immigrants determined to create a better life for themselves.
Immigrating to a new land – whether yesterday’s Pilgrims arriving in New England or today’s immigrants taking up residence in the United States – requires real ambition and a desire to get ahead.
It should come as no surprise, then, that immigrants tend to perform well on many financial metrics.
A study by the Fiscal Policy Institute demonstrates that 18% of small business owners in the U.S. are immigrants – a share that exceeds their proportion of the population by a whopping 50%!
Other studies suggest higher savings rates amongst immigrant populations, as well as lower debt burdens.
We’ve identified the habits of settlers that made America great – the core features of the “immigrant money mentality” that you can use to improve your finances today.
Make Wise Educational Choices
While the world will always need artists and political scientists, these are two majors unlikely to find ready employment at a wage that justifies the high cost of the education.
On the other hand, an immigrant cousin of mine who studied air conditioning repair at a low-cost junior college now owns a large air conditioning repair business earning him hundreds of thousands of dollars per year and employing 15 others.
If you get into Stanford, by all means, go! But understand that not all universities (or majors) yield the same return on investment.
Know the Value of Each Dollar
Immigrants often come from countries with simpler standards of living – places where two-car households, new technology every year, and frequent meals out are not the norm.
So, you’ll often see immigrants shopping at lower-cost ethnic grocery stores, choosing to share vehicles or commingle resources by having many family members live under one roof.
You don’t need to do each –or even any – of these things to get at the underlying principle: Every dollar you don’t spend on more expensive food or housing is money that can be put toward another bill or savings.
Over time, this adds up in significant ways. Even shaving $5/day off your budget and investing it could result in hundreds of thousands of dollars at retirement.
Is that worth using public transportation or bringing your own lunch to work? We think so.
A Day Job May Not Cut It
Immigrating to a new country means hard work building a life with limited resources, and our ancestors often put in much longer days.
Even today, you’ll often find immigrants working two jobs to get ahead.
It’s that sort of anything-it-takes mentality that enables them to save more money than many of us with cushy office jobs. That doesn’t mean, of course, that you should work yourself to death or neglect family and other important responsibilities.
But it does mean you should try to find additional sources of income — whether it’s by freelancing a bit on the side, babysitting, or even selling your hobby crafts on Etsy.com.
The bonus: Each additional dollar you make is a dollar more than you spend now to maintain your lifestyle. That means it can be readily saved or used to pay off debt.
Debt? What Debt?
The Pilgrims didn’t have credit cards, mortgages, or car notes — neither do most recent immigrants, for that matter. They lived without debt by necessity, and managed to secure most of their needs successfully.
Today’s immigrants often don’t have access to as much credit as long-time U.S. citizens, do either, yet they still manage to get by.
They rent for longer periods of time, put down larger down payments on cars or homes, and choose lower-cost educational alternatives, rather than take on heftier loads of debt.
Build it Yourself
Whether it’s building a home with your own bare hands or starting a successful new tech start-up, immigrants often understand the need to be enterprising and resourceful.
The recent recession, too, has taught us to rely on ourselves.
We can seek ways to become more self-reliant, whether by building a second income stream, planting our own vegetable gardens, or repairing our own cars.
Have you ever noticed that the South Asian family who owns several small businesses in the area collaborates on just about everything?
Immigrants who have limited access to credit will often pool resources to get ahead. Mother, father, uncle, brother, and sister all work tending shop or pitching in their savings to buy a new business.
The power of many amplifies your drive and helps make your ambition a reality.
Consider pooling resources with family and close friends or accessing crowd-funding options, such as Kickstarter.com, rather than taking on debt.
As the daughter of immigrants, I saw my parents work two jobs each in order to save, pay for cars in cash, and help fund our future.
Unfortunately, I too, got seduced by the promise of student loans, credit cards, over-consumption, and other poor financial habits of modern America.
I thought my parents’ insistence on cash payments and avoidance of credit were a result of provincial attitudes — of not knowing any better.
Now I realize the error of my ways, and try harder to emulate their immigrant money attitudes. When combined with the opportunities this great country affords us, it’s a powerful combination.
Janet Al-Saad is the founder of personal finance website, the FiveTenTwentyClub.com. The site features expert advice, tips, and special deals to teach you how to transform your financial future on as little as $5 a day.