By Omar Shoukry
Notable deficiencies in financial management skills over the last decade in the US have encouraged a growing interest in financial literacy programs. Particularly since the 2008 recession, many higher education institutions have launched modern finance curricula for students. Additionally, several organizations have introduced mechanisms for employees to connect with their financial planners and banks began offering similar paths to financial literacy for their customers. Despite the increasing impulse to assist Americans in becoming financially literate, however, there is an essential group that is often overlooked: migrants and refugees.
Financial literacy is one of many tools that help migrants plant roots and regain control over their lives. Financial education entails establishing sustainable, positive financial practices and requires personalized approaches to effective money management. Exploring migrants’ experiences and interests is essential to understand how financial stability can be acquired in the US. This understanding of the economic plight of immigrants, along with first-hand accounts to show for it, is what led me to pursue financial coaching through the International Rescue Committee (IRC).
Personal Path to Financial Coaching
As a first-generation Egyptian immigrant, I have fallen victim to my fair share of overdraft fees, surprise medical billing, and credit score-eroding missteps. While some of these instances were born out of a lack of knowledge and understanding of the US financial system, others resulted from predatory and dishonest business practices. Even after ten years living in the US, armed with a bachelor’s degree and five years of professional experience across a variety of finance roles, I am not impervious to such pitfalls.
One early personal experience that shaped my view of the financial barriers immigrants face involved receiving a $6,000 hospital bill for care after a life-threatening asthma attack. Thinking my insurance would cover most, if not all, of the cost, I was shocked when the hospital demanded full payment out of pocket. The insurance payor refused to shoulder any of my dues because, despite visiting an in-network hospital, I was treated by an out-of-network physician. While in negotiation with both my insurance and the hospital, I found that my debt was sold to a collection agency, giving me just one year to clear my balance before reporting the debt to credit bureaus. Luckily, I was able to pool personal savings and funds from family to pay off the debt within the year, preventing further damage to my credit. The ordeal left me painfully aware of the powerful machinations that can easily claim the livelihoods of others with half of my education, know-how, and financial resources.
While episodes like these affect far too many American citizens, conversations about my experiences led me to realize that migrants have heightened exposure to such vulnerabilities. With this in mind, I felt called to partner with the International Rescue Committee (IRC) as a volunteer financial coach to help empower other immigrants in need of financial literacy. The migrants I work with through the IRC are often asylees escaping persecution and life-threatening conflicts, arriving to the US with meager resources and extremely limited English proficiency. If getting to the US isn’t hard enough, living in it successfully is an undertaking many immigrants find themselves woefully unprepared to navigate on their own.
In financial coaching, I saw an avenue to alleviate one stressful aspect of transitioning into American society and the humbling immigrant experience that ensues. The objectives of financial coaching are to reduce stress, increase sense of control, and improve one’s ability to absorb financial shocks—critical tools that could lead a newly-minted American family on a path to economic security and success. I also view financial coaching as a powerful lever to increase economic prosperity of local migrant-dense communities. Stuck on the fringes of society, migrants are often discredited and blamed for straining state and local social services and welfare programs. Increasing financial literacy of migrants can engender a greater sense of financial freedom which will allow them to contribute more reliably to their local economies, thus alleviating poverty while increasing overall economic development. Combining my finance-oriented undergraduate education, professional experience, and my own journey as an immigrant made volunteer financial coaching with IRC the ultimate passion project.
Joseph’s Journey to Financial Health
To illustrate the financial knowledge gap encountered by migrants, I will share my experience coaching a recent immigrant family from Syria. Joseph, a man in his late 40s arrived late last year with his wife and three children (ages range from 12 to 21 years old). Soon after the outbreak of the 2011 Syrian civil war, Joseph and his family witnessed political upheaval that changed the country and reframed the once prosperous nation as a conflict zone. Along with 20+ million other Syrians, Joseph was stunned at the transformation of his country, but, like many in his local community of Homs, Syria, Joseph didn’t initially respond to the civil war by fleeing. He strived to maintain normalcy despite the increasingly dire conditions. It wasn’t until 2021 that he made the decision to seek political refuge in the US after his hours as a public-school physical education teacher were halved, eliminating a sizable portion of his already meager income. In a humbling confession during our first session, Joseph shared:
“I have been beset with more tragedy in the last five years than I have in my entire life. But that’s okay. I’m here in America now and determined to create for my kids a life that would prevail over the tragedies of the past.”-Joseph, IRC client
Joseph was granted asylee status and resettled in a rental apartment in southeast California, where he started working towards rebuilding a new life outside Syria. My involvement with him was strictly within the bounds of financial literacy coaching, though he did confide in me the difficulties of transitioning to a foreign country. Indeed, his struggles are timeless and all too familiar, struggles that are recognized by any first-generation immigrant, including myself. Our somewhat common background, culture, and language helped establish an early trust between Joseph and me, a critical prerequisite to having a constructive and productive advisor-client relationship.
As a volunteer, I was given excellent resources by the IRC to conduct my financial literacy sessions with Joseph. IRC’s library of carefully curated and translated documents were crucial not only in introducing complicated financial definitions and concepts but also in tailoring a class based on the pertinent and immediate needs of the client.
Financial coaching is not only about teaching complicated financial concepts, but also about conditioning a paradigm shift intended to allow clients to become active managers of their own finances. With this in mind, I usually started each session with questions like “What’s standing in your way?”, “What does success look like to you?”, “What are you most proud of?”, “What’s the most important thing in the world to you and why?” All of these questions are meant to establish rapport with the client and to challenge him/her to start a constructive session after breaking down conscious and subconscious barriers. In Joseph’s answers, and after filing an intake sheet, it was apparent that he needed specific help with credit and budgeting.
Building Good Credit
Credit is a complicated topic. While good credit can be a huge asset, it can be difficult to build without slipping into debt—a concept that is sometimes challenging for newcomers to understand. “What does credit mean to you?” and “What’s another word that means the same thing as credit?” are two initial questions to gauge a client’s understanding of basic credit forms. In Joseph’s case, he correctly identified credit as debt, but stopped short of identifying the other half of the equation; that is, the “trust” with which lending institutions feel towards a borrower based on a credit score.
I should note that Joseph’s response was not at all surprising to me, as most countries in the Middle East and North Africa region, including Syria, don’t use a credit score to determine one’s creditworthiness. Nevertheless, with the client’s approval, IRC obtained a copy of Joseph’s credit report which I then dissected with him in depth. Reading a credit report can be daunting and discussing the main levers of a credit score can be even more confusing. At its core, the report shows open and closed accounts, dates that accounts were opened and closed, payment history, credit utilization, current account balance, and loan payment status. Each of the aforementioned factors play a role in determining the credit score of a borrower, but consistently paying creditors on time is the single most important factor in determining a credit score—even one missed payment can have an impact. Revolving credit utilization also weighs heavily on a credit score and in effect indicates how much one owes on his/her accounts.
Based on his credit report, Joseph’s credit score was in the mid 600-range. Affecting his score was, unsurprisingly, how newly his accounts were established (measured by the age of the oldest account and/or the average age of all accounts), as well as lack of recent revolving account information. Boosting Joseph’s score, however, was having no missed payments and minimal credit inquiries (IRC’s credit inquiries do not affect clients’ credit scores). Joseph has shown to be keenly aware of the importance of not missing any debt payments, irrespective of the detrimental effects it would have on a credit score. In fact, discussing debt in general has revealed his extreme aversion to getting behind on any payments, an understanding that stems from religious conservatism and cultural conditioning that was indoctrinated in him at a young age. Nevertheless, my client’s only outstanding debt obligation, as was confirmed by his credit report, was a car loan he used to purchase a vehicle soon after he arrived in the US. In the 10+ monthly debt payments Joseph has made to pay down his loan, he has shown a strong commitment to prioritizing timely payments and abstaining from taking on additional debt obligations.
The Importance of Budgeting
Our next topic of discussion was budgeting. Positive behavioral change regarding money management skills fundamentally stems from sound and deliberate budgeting habits.
In its simplest form, budgeting is telling your money where to go instead of wondering where it went.
Joseph, like most people irrespective of nationality or background, does not budget per se. Instead, he has a rough idea of how much his monthly recurring expenses are and remembers to set that amount aside from each monthly pay stub. Together, we first sought to reinvent this behavior by filling a monthly budget itemizing projected expenses for the month down to the smallest detail. After completing that budget together, Joseph and I each saved a copy of the budget with the intention to revisit it four weeks later and judge net results. In the interim, Joseph diligently documented every expense in his notebook, which he neatly saved along with accompanying receipts. While time-consuming, Joseph reported feeling less stressed and more in control of his finances knowing that inflows and outflows of his money are backed up by a paper trail of notes and receipts. Four weeks later, after recording actual income earned and expenses spent, we were both pleased to find a net budget surplus, a product of admirable financial discipline and careful planning.
In tandem with budgeting, Joseph and I also discussed the concept of net worth, or total assets (what is owned) minus total liabilities (what is owed). While some might deem it inopportune or unnecessary to engage with a client from a poor socioeconomic background on the concept of net worth, it’s imperative to cultivate big picture understanding of building wealth, especially for refugees who seek to plant roots and build sustainable economic security. Additionally, net worth is one of the biggest indicators of financial health following one’s credit score. As such, it determines one’s access to financial products as well as one’s ability to command favorable credit and lending terms from financial institutions. Similar to the budget exercise, I used an IRC template to help itemize Joseph’s total assets and total liabilities, arriving to a net deficit baseline figure from which we discussed ways to improve. Among a multitude of tactics to increase net worth, I advised Joseph to focus on saving $1,000 for emergencies and to pay off debt, starting with the smallest debt first (an approach known as snowball method). With good financial discipline, both goals are well within Joseph’s reach in the not-too-distant future.
Beyond Financial Coaching
The predominant focus of my sessions with Joseph was to help him achieve self-determined goals by changing his financial behavior and facilitating decision making. More than just sharing financial terms and concepts, our sessions were geared towards identifying internal biases, breaking psychological barriers, and developing a sense of worth and self-control. Joseph was introduced to the basic principles of credit, how to avoid credit pitfalls, and how to read a credit report and interpret what it says about one’s current financial standing. With our budgeting sessions, Joseph started developing healthy financial habits such as documenting and tracking daily and monthly expenses. In a show of improvement, Joseph netted his first ever budget surplus and vowed to maintain this monthly budgeting practice beyond our sessions, given how good it made him feel. Our sessions on credit and budgeting collectively laid the groundwork for a healthier relationship with money management, one that will promote overall financial well-being and alleviate stress.
Joseph’s resolve and his unmitigated willingness to reinvent himself in this new land is both humbling and motivating. It is an affirmation of why I find purpose in financial coaching and a reminder of the modest beginnings that we all, be it us or our forefathers, experienced upon arrival in this land of opportunity. People like Joseph who chart a thankless path towards self-improvement under circumstances where cynicism could have well taken over is one of the great many human stories of perseverance and grit, hallmarks that continue to define the American immigrant experience.
 For privacy reasons, the Syrian refugee head of household will be identified under the pseudonym Joseph.
 Our first budgeting session was timed in such a way that it landed around the beginning of the month so that we could track results four weeks later.
- Abt Associates. “Financial Education at Institutions of Higher Education (IHE) Study: Needs Assessment Report – (Final).” Submitted to Consumer Financial Protection Bureau, April 28, 2021. https://files.consumerfinance.gov/f/documents/cfpb_financial-education-at-institutions-of-higher-education_record_2021-09.pdf
- Swaminathan, Ravi. “When Companies Invest in Employees’ Financial Fitness, Everyone Benefits.” Forbes. July 6, 2022. https://www.forbes.com/sites/forbesbusinesscouncil/2022/07/06/when-companies-invest-in-employees-financial-fitness-everyone-benefits/?sh=49b27025f66c
- Rose, Samantha. “How U.S. Banks and Credit Unions Are Teaching Financial Literacy.” OppU. November 15, 2021. https://www.opploans.com/oppu/articles/how-u-s-banks-and-credit-unions-are-teaching-financial-literacy/#:~:text=Big%20banks%E2%80%94such%20as%20Bank,the%20news%20for%20their%20efforts.
- “Why has the Syrian civil war lasted 11 years?” BBC News. March 15, 2022. https://www.bbc.com/news/world-middle-east-35806229
- DeMatteo, Megan. “The median American net worth is $121,700 – here’s how your credit score can impact your net worth.” CNBC. May 24, 2022. https://www.cnbc.com/select/how-credit-score-impacts-net-worth/
Omar Shoukry is a Corporate Development Associate at Transformations Care Network, a fast-growing national network of mental healthcare providers. Omar received his bachelor’s degree in 2018 from California Polytechnic State University in San Luis Obispo, CA and currently resides in Boston, MA.
For questions, please reach out to Professor Kimberley Wilson at Kimberley.Wilson@tufts.edu.