What is your current financial reality? Life-altering decisions need to be made within the context of your financial health, so getting an accurate picture of your financial health is imperative.
If you already have a solid financial plan, use this time to evaluate if it’s working effectively. Your financial situation is not static, and as your personal situation changes, your financial requirements must accommodate your new reality. Start evaluating your current state of finances by asking the following key questions:
Are your assets growing and your liabilities shrinking as you pay off debt, or are you headed in the reverse direction?
For how many years have you experienced this financial improvement or decline?
Are your retirement savings reaching the levels you’ve identified you’ll need?
If you have financial difficulties are they systemic, due to some extreme one-time event, or due to large ongoing expenditures?
Are you over- or under-insured? In what areas?
Assessing your current financial situation offers critical information that will help you decide when and how to make Aliyah. For a family drowning in tuition expenses, moving to Israel might provide some relief. For another family, leaving one’s main source of income might be taking a huge risk. For everyone, however, assessing the current financial picture is crucial in order to plan the future.
Managing your resources during your Aliyah can help tremendously in reducing stress and avoiding surprises.
Here are some key questions to ask yourself:
How much money are you currently spending monthly?
Do you know how much you can expect to spend monthly in Israel?
What large initial expenses can you expect within three months of landing? Within six months?
What will happen to your income prior to and upon making Aliyah?
How much of your total savings do you anticipate using in the first six months?
Debt is unfortunately very common today in most Western countries. Credit card debt, school loans and large mortgages, among other debts are often the norm. Limiting or eliminating your debt is important before making Aliyah, as it frees all available cash flow for day-to-day living in Israel. Running consistent deficits will, without any doubt, ultimately lead to financial ruin (as many Western economies slowly internalize).
Do you have an outstanding debt that needs to be repaid prior to coming on Aliyah?
If you don’t repay it before you leave, will you have the means to continue repaying it in Israel?
If not, then start by setting a monthly goal to reduce your debt by limiting your spending. Long-term debt that you have no chance of paying off prior to Aliyah needs to be affordable on an Israeli salary. Simply walking away from your debt is a bad idea. Not only is it highly questionable ethically, but it will also kill your credit rating if you ever need to return to your home country, and may catch up with you in Israel, as well.
Cash flow planning can help you to avoid serious mistakes that can increase stress and make your absorption much more difficult. Notwithstanding the extra demands on resources during the Aliyah process, every family should have access to three to six months of emergency cash reserves, at a minimum. Accidents happen. Situations change. Promised jobs don’t always work out.
Do you have the necessary funds to finance your transition to Israel?
How much liquidity do you need for the move?
What happens in the event that things don’t go as planned — do you have the resources to fall back on, or can you rely on family members to help you out?
Some of the biggest decisions facing most olim center on housing:
Do you need to sell your home in order to be able to afford making Aliyah?
What’s the real estate market like in your current location?
Will you be forced to sell low after buying high, or will you be able to sell your home at a good price, enabling you to pay off your mortgage and purchase a home in Israel?
Sometimes starting afresh can be a great decision, but housing costs in Israel are generally quite expensive. Choosing the location and timing of your purchase is essential.
Should you buy a home quickly upon arrival in Israel to avoid paying rent, or wait and see where you want to live before investing in housing?
Where will you go on arrival in Israel?
Is there a specific part of the country that you’re interested in living in?
What are prices like in that area?
Can you afford to live there? What are your fallback options?
Are there employment opportunities in that area?
Are there other areas that might be better from a financial point of view?
Having sufficient insurance means that your assets are protected — and your primary assets are your earning power and your ability to care for yourself and your family. Although ideally your comprehensive insurance package will be tailor-made to suit your requirements, it must be reassessed for each stage in life as well as during major life changes like Aliyah.
Are your current insurance policies valid abroad?
Based on what assumptions did you buy your current insurance and what will change if you move to Israel?
Will similar insurance policies be available in Israel?
Can you afford to keep the same amount of insurance coverage?
Can you afford not to?
Moving to Israel can offer the opportunity to start over and explore new horizons. Some olim plan for one type of work during their initial transition period and a different type of employment (or entrepreneurial venture) for the long term. Many find it advantageous to continue their current job or occupation from Israel by working over the internet or some form of telecommuting. The covid reality has shown the efficacy of working remotely. You might consider changing from an employee to a consultant, if your employer is interested in this — often, companies find it cheaper to employ you even when you’re abroad, with lower overhead costs compared to local employees. The advantage of these approaches is significant: these olim begin their new lives in their new country with a stable source of income.
However, most olim look for work in Israel. Pre-covid the unemployment rate in Israel was very low, and the market growth was high. However, the covid reality has impacted the job market and economy in Israel, similar to many other countries across the world. There is a huge deficit and many sectors have been affected economically.
How does the labor market in Israel compare with that of your home country?
Have you recently been laid off, with grim employment prospects? Does Israel possibly offer better work prospects for you?
How are you planning to make a living in Israel?
Do you plan on continuing with the same company or in the same field, or retraining?
How high are Israeli salaries in your field?
Covid reality has changed the whole travel/work reality with travel out of the equation. However, before Covid some olim travelled back periodically to their old jobs in their old countries. Some found it necessary to travel weekly, others monthly. Working for specific periods of time (for example, an accountant during busy tax seasons, or those who have summer employment at camps) also provided at least a short-term transition option.
Many Anglo-Israelis continued to commute for extended periods of time. It was not ideal for family life, but it did work for some people at specific times in their careers. Commuting allowed them to transition slowly into a new work environment, culture, and country without feeling like they were compromising an entire professional career.
Consult and network with as many people as possible in your field. Many of the Aliyah organizations have employment specialists to help with job searches and with managing your expectations. According to Nefesh B’Nefesh, before Covid 95% of new olim found employment within their first year of Aliyah. Narrow down the statistics to your specific field of employment to assess the chances of finding work within a reasonable period of time. Brainstorm with others working in related fields (or completely different fields that you might consider) to see the complete range of opportunities that may be open to you in Israel. If you’re just beginning to research, don’t begin by inquiring about job openings. Rather, ask about the type of work in the field, how it differs from the work in your country of origin, and about Aliyah experiences. Ask for referrals to others working in your field and then keep in touch with them during your Aliyah process. This way, you can gather valuable information and create a large networking group that will be invaluable down the road when job opportunities arise.
If you operate a business outside of Israel, here are some questions to consider:
Do you need to sell or find alternative management for your business?
What will be the tax consequences for your sale?
How will it affect your future cash flow?
Asset management is a major issue that olim need to consider prior to coming to Israel.
Do you keep your assets abroad or bring them to Israel?
If you need to bring them, when will you need to do this?
Should your asset diversification change if you move to a different country?
How will the changes affect your taxes?
Are your investments earning more than the rate of inflation?
Are you sufficiently diversified and thus protected from market fluctuations?
Does your portfolio risk level reflect your current risk preferences?
Do you need to rebalance your investments and sell off better-performing securities that now represent a much larger percentage of your portfolio?
Have you reassessed ailing investments to ascertain their long- term viability?
Wills, trusts, and health directives are all different and critical elements of your plan. Keep your documents and financial structures (such as trusts and corporations) current and relevant in order for them to remain effective. Any plan that doesn’t incorporate changes in personal circumstances can quickly become irrelevant. Even if your will or retirement plan met your needs in one country, they might not in Israel, with its different legal, medical, and financial system. Most olim need to update and adapt their retirement plan when moving to Israel. Consider the following questions:
Where do you expect your future retirement revenue to come from?
Will it be affected by making Aliyah?
Are there risks in receiving your retirement income in a foreign currency, when you will be living in Israel on shekels? Decreased buying power can severely impact your plan. Have you accounted for this?
Are your wills and trusts valid in Israel, or do you need to write new ones?
The United States requires non-residents to continue paying taxes. That means that in addition to continuing to comply with US tax law, olim need to also consider Israeli tax planning. Although your tax return may need to only be completed by March or April, many financial changes must be considered prior to Aliyah to reap the benefits and lessen your exposure to potential higher taxation. Olim need to balance different tax systems to avoid double taxation as well as structure businesses to minimize taxes both in Israel and the United States, among the many issues that should be considered.
While leaving the United States to come to Israel may require significant tax planning, the consequences of leaving other countries can be even more important, as most countries do not require non-residents to continue to pay taxes. Changing one’s tax residency status can significantly impact on taxes owed and should be carefully determined depending on your unique circumstances.
How do you minimize the potential tax consequences of leaving your current country of residence?
When should you change your tax residency status (applicable for non-Americans)?
What reporting requirements are unique for non-resident Americans?
How are foreign pensions taxed in Israel?
Is there income earned that might be taxed in different ways in Israel and in your home country?
How should your income be structured in Israel?
Monthly budgeting involves dealing with the day-to-day expenses we all need to budget for on a monthly basis. However, there are other expenses that must be factored into Aliyah plans ie special events and circumstances. Think about the next five years, anticipating events before they occur:
Do you have elderly parents whom you need to support and/or visit often?
Do you have a family simchah like a bar mitzvah or wedding that you’ll need to finance soon after Aliyah?
Will you need to have significant funds to marry off your children?
What are your unique circumstances that you need to build into your plan?
All these questions can be overwhelming to face at once. Break them down into critical, important, and less important areas to help you focus on the major decisions at the beginning of the process.
Once you have started to think about these issues, find professionals (especially those in Israel who understand the local scene) to advise you. Experts such as lawyers, tax advisors, and investment managers deal regularly with many similar types of issues. Sometimes taking shortcuts to save money can end up costing dearly in the long run. There is a wealth of information ready for you to tap into. Update yourself and become knowledgeable, however, treat your financial knowledge the same way someone with a health issue would research his particular medical condition. Go armed with information to the specialist, and be careful about diagnosing or medicating yourself based on knowledge gleaned from the media or casual discussions with friends with little recent Israeli experience.
Switching to Israel’s health care system can be a major adjustment from your home health care system. All Israeli citizens are entitled to join one of four health funds, which cover all basic medical services. The health funds all offer supplementary insurance that covers a variety of goods and services not covered by the standard coverage (each fund’s supplementary plan is different and changes often). Most people feel that the Israeli system is excellent, offering people high-quality care for a reasonable cost. Israel’s socialized medical system covers most expenses related to ongoing standard medical care and is financed through health tax payments paid from salaries to Bituach Leumi (the Israel National Insurance Institute). Co-payments are required for visits to specialists and for prescription drugs, but these payments are limited on a quarterly basis per family.
Some questions to ask yourself:
What specific medical issues does your family face on a daily basis?
Do you have special needs to consider prior to coming?
Is there a condition in your family that requires a very specific type of treatment, or one that is not part of the health basket of medicines that has been approved by the Israeli Ministry of Health, or the supplementary health fund insurances?
Medicines that are not included in the Ministry of Health’s basket, or the supplementary health fund insurances can be very costly and can even undermine an entire Aliyah plan. If relevant, speak with the Israeli health funds (essentially Israeli HMOs or health maintenance organizations) to determine if your special needs will be addressed in Israel. Don’t be afraid to be assertive in dealing with medical issues in Israel. The Israeli culture demands this assertiveness in many basic situations, and health care needs are important enough to justify this assertiveness. If you don’t feel comfortable being assertive, even at the exploratory stage, engage others who can help you through the system.
It often takes at least six months to improve Hebrew language skills, even if you already have a solid basis in the language. Don’t expect to be able to learn a high level of Hebrew and begin working in your field simultaneously. Much depends on the nature of the job in question.
A marketing professional will need a completely different level of language competency than a software engineer. Ask yourself:
Is language acquisition critical to your Aliyah success, or can you afford to slowly acquire proficiency while you survive and flourish socially and economically in English? Do you need to go back to school in order to restart your career in Israel? If so, language requirements can be a major barrier.
What about your children’s education and language acquisition?
Do you need to budget additional funds for private tutoring prior to and immediately after Aliyah? When choosing a community to live in, how important is it for you and your family to live in a community that speaks your mother tongue?
In communities such as Jerusalem, Ramat Beit Shemesh, and Efrat, many olim can get by with little or no Hebrew. This has advantages and disadvantages. While easing your Aliyah experience in many ways, living in a community that does not speak Hebrew will stunt your language acquisition and may not be wise for your family’s linguistic and cultural integration. Taking the time to acquire Hebrew for specific professions can help you integrate professionally in Israel and help you attain financial stability. However, delaying entering the workforce can deprive you of tax advantages available to olim. Consider the issue carefully, as language acquisition can have a major impact on your financial stability both in the short and long run.
Start formulating your personal financial plan for Aliyah.
Begin by identifying how you define a successful Aliyah. Write three important long-term goals that you associate with Aliyah.
Evaluate your current financial situation. Are you in a healthy financial position or are you struggling financially? How is Aliyah likely to affect your overall financial health?
Consider the various components of your plan and identify the two most critical areas that you need to investigate. Use the questions above to guide you through the investigative process as you begin thinking about where you should invest time and resources in order to find the answers you need prior to Aliyah.
Start asking questions from experienced professionals who are willing to share their knowledge.
Begin networking by reaching out to people who can share their knowledge regarding the critical employment areas you’ve identified.
Determine if Aliyah is possible in the short term or if it will need to wait a few years.
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