Israel

Aliyah‘s Financial Realities

January 17, 2013

Know the Reality

People decide to come on Aliyah for a variety of reasons, including religious beliefs, familial or cultural ties, and a desire to be part of the gathering of the exiles.

shekels shekalimWhatever their motivating factor, the number one question that people ask themselves prior to making the decision is, “Can I afford to come on Aliyah?”  Other variations of this question include, “Can I make it in Israel financially without compromising too much on my standard of living?” “We’re living in Israel but I don’t understand how Israelis make ends meet.” “How do I retire in Israel without compromising my financial stability?”  Or, “We want to make Aliyah but have absolutely no idea where to start and how it will affect our family”.

Depending on their stage in life, some people’s pre-occupation with these issues relates to their children and grandchildren.  Having raised their families in familiar surroundings, their offspring relocate to Israel, and the parents/grandparents often feel a tremendous lack of ability to guide and help in very unfamiliar situations.

I’ve been hearing these questions for years in my financial planning seminars in Israel and North America, and they were the motivation for my recently published book, A Financial Guide to Aliyah and Life in Israel.  There are many people around the world – and even in Israel – who are thinking about making Aliyah, but don’t have the tools to evaluate whether such a big move is feasible, or how to do it.  All these questions (and many more) are magnified by the lack of a comprehensive financial guide to help people through the Aliyah process – from planning, to arrival and successful integration within Israeli society.

Aliyah is a dream that must be grounded in reality.  Many Olim (people who make Aliyah) fail to plan correctly and return to their country of origin or spend years frustrated by their economic challenges in the Jewish homeland.  Financial competence is an absolute necessity – not a luxury – when making Aliyah and living in Israel.  Potential Olim should evaluate the effects that Aliyah will have – not only today – but also 20, 30 or 50 years down the road.  Today’s Jewish family needs to learn effective money-management skills  for an increasingly complex international financial world – something all the more complicated for those considering settling in a country that is fundamentally different than their home country.

While many Olim can use English in Israel to get by with the day-to-day tasks of living – especially in communities where there are large numbers of English speakers – this should not lead you to conclude that the financial system in Israel is similar to that of other Western countries.  It is not.

Forget everything you know about managing your finances in your country of origin.  Things run differently in Israel, for better or for worse.  Israel’s unique financial system has developed from its unique international standing of being surrounded by enemies and unable to build financial relationships easily with its neighbors.   By necessity, it has created its own unique standards, a convergence of Western and Middle Eastern cultures – with a moat-like independence. It’s no wonder that so many people “can’t figure out the system.”

While I’m not advocating competing with your neighbor, the “Jones” or “Cohens,” I find that because finances can be such a taboo subject, people often have no perspective as to where they are in the financial health continuum.  This lack of information blinds them from making the right decisions.  They then look back years later, wondering why nobody shared with them the keys to successful financial planning when making Aliyah.   I have found that providing this perspective can be one of the most crucial elements in successfully planning and implementing your Aliyah.

Shalom Bayit (Peace in the Home)

Whatever financial issues one is struggling with will be exacerbated after the move to Israel. Without the flood of additional challenges brought on by Aliyah, financial stress is already the number one cause of friction between spouses in Western society.  In my own experience, I have seen the terrible shalom bayit issues that arise from a lack of financial acumen and even more importantly, a lack of financial direction.  Financial stress not only breaks apart the family unit, the core fabric of society, but it causes us to avoid making decisions, or to “freeze up.”  Financial inactivity does more than just prevent us from getting ahead; it too often also causes us to fall backwards into a bigger and bigger hole, thus perpetuating a cycle of financial instability.  When people don’t know what to do, they often procrastinate, which has severe negative ramifications.  Doing nothing (or putting things on hold) might seem like the easy way out – but in the end can ruin one’s life.

Plan Ahead

Money is important, but it is only a means towards fulfilling our potential in this world. The less time that we need to devote to it, the more time we have available for family, personal growth and fulfilling our dreams and our potential.   It is therefore vital to take control of one’s finances before making Aliyah, whenever possibleCreating a solid foundation for financial health allows you to spend the least amount of time necessary worrying about money, free to pursue life’s priorities.

Financial planning of any sort is not an exact science but rather a process of calculating odds, and there are many variables and unknowns to consider prior to Aliyah:

  • Do you take a chance that you’ll find work within the first six months, or do you delay your flight until you’ve saved up more money or you’ve landed the Israeli job of your dreams?
  • Do you start looking for work immediately or work on language acquisition first?
  • Should you convert your savings to New Israeli Shekels (NIS) or keep them in dollars?

There is no “one answer fits all”.  It’s a process of calculating the odds (even informally) and then going forward, acting on those calculations, without being paralyzed by the lack of certainty.

Times are changing.  While Israel’s economy is among the most stable in the world, slower international growth in recent years has undoubtedly had a negative effect on Israel and its citizens and taxpayers.  Unemployment is projected to rise as exports decrease and overall economic activity slows.  When the employment market weakens, finding a job will be increasingly difficult.

So what can you do to adjust your Aliyah considerations to the changing economic times?  Keep in mind how the issues affect you personally given the changing times, and how you can adjust your plans if necessary.  Be proactive and don’t wait for someone else to fix your problems.  Waiting for macro-economic changes (that affect the economy as a whole) can help, but micro (at the household level) changes have even a greater chance of being successful.  Take things into your own hands and with G-d’s help you can make it happen. You won’t regret it!

I truly believe that living in Israel is beyond the “natural,” beyond the norm that you find in all other countries in the world.  Ask any Oleh Chadash (new) and I have no doubt that they will have an endless number of stories to share confirming this point.  Nonetheless, people need to decide how much to rely on the “above nature” (me’al hateva) type of reliance on G-d, versus a natural, normal decision-making process focused on everyday effort or hishtadlut.  You can pick and choose what decisions you need to concretize and those that you leave in flux.  But at least you’ll have the facts in front of you to make educated decisions that fit into your lifestyle and your religious beliefs.

 

OU Israel Center joins with Arutz Sheva to present webcast on Israel Election night–keeping English-speaking audiences informed. The webcast will appear both on www.ou.org and www.israelnationalnews.com on Tuesday, January 22.

 

aliyah labinsky

 

A Financial Guide to Aliyah and Life in Israel is written for both the layperson and professional. It spans a range of financial issues, from pre-Aliyah (creating a financial plan, real estate decisions, asset management, etc.) to post-Aliyah (employment benefits, banking, living on a budget, tax planning and more).

 

 

 

Baruch Labinsky lectures regularly for Aliyah organizations in Israel and around the world on various financial topics. Licensed by the Israel Securities Authority as a portfolio manager, Baruch specializes in working with Olim who are successfully transitioning their finances to Israel. His book, A Financial Guide to Aliyah and Life in Israel, is available in bookstores, at Amazon and through www.labinsky.com. Contact Baruch at Baruch@labinsky.com.