You’ve made the decision to come to Canada and you are excited to start this new journey in the land of the Maple Leaf.
Moving to a new country is not an easy feat as you have to sometimes learn a new language, find a new community and build a new life all over again.
One of the main challenges many immigrants face is trying to navigate this new financial landscape with its own standards and policies that may be different from their home country.
In this guide, we’ll walk you through the main considerations you will need to think about and provide tips that will help you manage your finances as a newcomer in Canada.
Develop a Solid Budget
As a newcomer, you will be starting over with a new slate possibly with the cash you are taking from back home.
As you start to navigate the early days, you will need to ensure that you are managing your cash flow since you may be looking for a job or going to school.
You will need to develop a solid budget that will track all your expenses from rent/mortgage, groceries, transportation costs against your savings or cash in hand.
If you are still job hunting, you will want to allocate a monthly amount as your income so that you avoid overspending. Using these budgeting tips will help you to track your money life so that you are starting off on the right foot.
Research and Decide on a Bank
When you land in Canada, one of the first decisions you will make is figuring out where to open your first bank account. Canada’s banks are very stable with great risk mechanisms in place to protect your savings and investments.
There’s also the Canadian Deposit Insurance Corporation that protects your deposits of up to $100,000 which ensures your money is safe.
You will find that there is a group of banks called the “The Big Five” that are the most popular across the country and they offer many different financial products that you can choose from. They include:
- Royal Bank of Canada (RBC)
- Toronto Dominion Bank (TD)
- Bank of Nova Scotia (Scotiabank)
- Bank of Montreal (BMO)
- Canadian Imperial Bank of Commerce (CIBC)
It’s important to do your research on each bank, understand their rates and ask about the banking fees that will apply to their various accounts.
Also, when you visit the bank, meet with an advisor and have a conversation to discuss your needs and what you hope to achieve as you embark on a new life in Canada.
Most banks will have special programs for immigrants with some great perks like no bank fees for a year or a free safety deposit box among others.
Be sure to ask around and understand which one works for you and will best suit your needs. We’ve rounded up some of the immigrant programs currently available below:
They will offer a suite of various investment accounts, savings accounts and checking accounts that you can choose from. Ensure that you learn what each account is used for and figure out what you will need to start with.
Understand the Differences Between Different Bank Accounts and their purposes
In Canada, the most popular bank account types you’ll find are chequing accounts and savings accounts. You’ll also find that there are other services and products available like safety deposit boxes, online banking, debit and credit cards.
Check out New to Canada Banking Offers
A checking account is an account that is used for day-to-day transactions like depositing and withdrawing money and is attached to a debit card that you can use to make financial transactions.
There are typically fees attached to these accounts and they usually do not accrue interest.
A savings account, on the other hand, is used to deposit and save money. This account will allow you to gain interest and it is advised that you shop around to get the best interest rates on your money.
This is an account that can be a great place to save money and jumpstart your investing journey.
Banks and other financial institutions also offer online banking which is a more convenient way to manage your banking transactions and allows you to pay bills, move money to different accounts, view interest rates and view your monthly statements.
Money Tip: When you join a bank or financial institution and open a bank account whether it’s a checking account or a savings account, ALWAYS ask about the fees that are attached to each account. Also, when you receive your debit card, understand what fees are attached to the card and how much it is going to cost when you use it.
Understand the Difference Between an RRSP and a TFSA
In Canada, there are many ways for you to build your savings, grow your wealth and save on taxes. Two popular savings accounts are Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA).
The Tax-Free Savings Account program started in 2009 and allows for you to save money tax-free as any amount contributed up to a certain amount (which changes every year) is generally tax-free.
Also, any income earned in the account is also tax-free even when withdrawn. To learn more about TFSA accounts, you can check out this site.
The Registered Retirement Savings Plan is a program that the Canadian government introduced to help Canadians save money for retirement.
The RRSP is a tool that can be used to reduce your taxes and taxes are deferred which allows you to save money much faster. It’s a great way to save money while reducing your yearly tax bill.
Be sure to understand the difference between each savings plan and speak to a Financial Professional to learn more about which program will work for your financial goals.
Start To Build Credit History
When you move to Canada, you will want to start to build credit right away. What exactly is the term credit history and why is it important? Credit is the ability to pay for something whether it is goods or services with the expectation that it will be paid later.
In Canada, your credit history is a summary of your past credit behaviour that will determine your eligibility for future borrowing opportunities.
Your credit history helps to determine your creditworthiness and shows how you handled borrowing and repayment in the past which is then gauged to see how you may treat and use credit in the future.
Furthermore, you are also assigned a credit score which is a number between 300 and 850 that represents your credit risk to lenders.
The higher the number you have, the better your creditworthiness is. One of the best and quickest ways for you to build credit as a newcomer is to get a credit card and use it responsibly, paying off the balance every month.
There are many credit card options available for new immigrants that you can explore and choose from. We recommend you get a no-annual-fee credit card and one with some perk or benefit.
Get Ready To Start Filing Taxes
At the beginning of the year, filing taxes is a major part of the routine of all Canadian tax-payers as you start to gather your financial documents to begin the process. The tax system is regulated by the Canada Revenue Agency (CRA) with the following deadlines:
- The deadline for filing your personal income tax return is April 30th.
- The deadline for self-employed individuals to file their personal tax returns is June 15th
Additionally, to learn more about filing your taxes, visit the CRA’s website and familiarize yourself with the process. You can file using a Tax professional or file on your own. If you choose to file on your own, we recommend TurboTax as a good resource.
How much money can newcomers bring to Canada?
Finally, as you start to settle in Canada, you will need to organize your finances to ensure that you are setting up yourself for financial success.
These tips will give you the fundamentals that you will need to equip you to take care of your money and begin your new life in Canada.
For more finance-related tips, grab our money checklist and net worth tracker and share this blog post with someone who needs this information.
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