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A Comprehensive Financial Guide to Aliyah Today

Binyamin Rose

Like charity, aliyah and budgeting begin at home. Before actually making aliyah, review your bank and credit card statements for the past year. Divide your expenditures into two columns: one for the basic essentials, rent or mortgage, food, medicine, utilities, transportation, apparel and footwear; and the second for extras like vacations, gym, restaurants, and gifts. The first column total should give you a ballpark figure of the minimum you’ll need for the basics you’ve become accustomed to.

Wednesday, January 19, 2011

Why is almost everything more expensive in Israel? There are several reasons, but high taxes and the fact that most consumer goods are imported are major factors.

Israel’s consumer markets resemble the European model. A value-added-tax (VAT) of 16 percent is either added to or included in every transaction, and there are almost no exemptions.

Import tariffs ranging from 30 to 75 percent, along with transportation and shipping expenses, also add to wholesale and retail costs.

Israel’s population of less than 8 million cannot support large, national discount chains such as the Walmarts of the world, who can offer lower prices and force competitors to cut prices or lose business.

While average figures will never totally mirror a family’s own experience, Israel’s Central Bureau of Statistics (CBS) reports the income and expenditures of the average household is equally balanced in the range of 13,000 shekels a month, or about $3,700. This is based on 1.3 wage earners per household and 3.3 family members.

Your earnings power may fall below the average in your early years, but should improve as your Hebrew skills pick up and you gain job experience.

The CBS breaks down these figures into quintiles, based on socioeconomic status. Within these five groupings, families in the lowest quintile spend some 7,600 shekels a month while the highest quintile families spend about 20,000 shekels a month. The approximate numbers in shekels break down as follows:

  • Housing, maintenance, and utilities: 2,700 – 6,700
  • Food: 1,700 – 2,800
  • Transportation and communication: 1,000 – 4,500
  • Education and entertainment: 800 – 2800
  • Health care: 350 – 1100
  • Clothing and footwear: 300 – 600
  • Furniture and household equipment: 200 – 800
  • Miscellaneous: 600 – 900

Large Orthodox families should expect spending an amount near the upper end of that scale for housing and food; in the mid-range for education, including day care; and toward the lower end of the scale for transportation — unless you buy a car, which is a major expense.

What kind of assistance can you expect to meet these expenses, even before you start working?

The Ministry of Absorption disburses grants of approximately 53,000 shekels or $15,000 to a family of four and 72,000 NIS or $20,000 to a family of six in their first year, paid in ten installments. These sums should cover around one-third of your annual expenses in that critical first year.

Immigrant employees are exempt from income taxes and Bituach Leumi (Israel’s social security system) in their first year. Income tax breaks continue, but are phased out, over the next two and a half years.

Health insurance is free for the first six months. You will be provided a health-care voucher at the airport when you make aliyah — take that along with you when you enroll in one of Israel’s four “kupat cholim,” or health plans (the literal translation is “sick funds”). You need to make this choice quickly. You can transfer from one plan to another, but only after you have been with your initial choice for six months. The health plan must accept you, no matter what your age or preexisting health conditions. Ask for referrals from your neighbors. Most plans have plenty of English-speaking doctors.

Following that initial six-month period, your health-care tax will vary based on your employment and family status. The basic rate for citizens with no income is 151 shekels a month and 114 shekels for yeshivah students. Employees pay for both health care and National Insurance (similar to Social Security) on a sliding scale based on their income, through a payroll deduction.

Your health plan will cover visits to a family doctor and specialists, hospitalization and surgeries at Israeli hospitals, as well as most prescription drugs. In Israel, while you can buy “aspirin” over-the-counter, you will actually get a discount if you buy it from your health fund, with a doctor’s prescription.

Many people purchase supplemental health coverage, either from their health plan, or from private insurers. You can go online at the Ministry of Finance and compare rates. Opinions differ widely as to the necessity of supplemental insurance and which plan is best. Everyone has an opinion, but few people are unbiased or truly knowledgeable about the differences. Make the best choice based on your family’s current health and your available resources, and daven that you won’t need it. 

 

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