Every year newcomers arrive in Canada. If you are new to the country, here are 5 tips to help you and your family build and manage your finances in Canada.
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5 money management tips for new Canadians
Adapting to Canadian society can be very exciting and challenging at the same time – many new immigrants face barriers in finding employment in their fields and positions that pay high wages. Because of these barriers, research the policies and limitations regarding work, student and residency permits and visas, before you immigrate. Here are 5 money management tips to consider:
1. Cover off immigration costs
Plan for the costs of immigrating to Canada before you arrive and after you land. These costs will likely include government fees and private services such as consulting with an immigration lawyer. In some cases, like certain permanent residency applications, you might also have to show a “proof of funds” – evidence that you have savings to live off of while in Canada. Planning for these expenses will help you and your family better manage your finances.
Before working with an immigration consultant, research them first. Some con artists pose as consultants in order to get your money. Learn about how to avoid being a victim of immigration-related fraud.
2. Plan for a possible decrease in income
Once you’ve immigrated to Canada, you may not find a job in your chosen field immediately. Or you may find your income reduced temporarily. Consider how this will impact your household finances. You may need to trim your budget or combine part-time positions to earn the income you need.
3. Look into your banking options
Most employers in Canada use a direct deposit method of payment, which means you’ll need to have a Canadian bank account. When opening a bank account, think about the specific kinds of financial services you’ll need: Would you benefit more from a chequing or savings account, or both? To open a bank account(s), you’ll have to provide personal information, such as a Social Insurance Number (SIN) and two pieces of acceptable identification. Apply for these documents in advance. Look for a local bank branch that offers services in your preferred language. Many Canadian financial services organizations offer specific services and banking packages for newcomers – compare your options before you choose.
Visit Introduction to Investing for resources in many languages.
4. Establish your credit
To borrow money in Canada, such as a mortgage for a home, a car loan, or a credit card, you need to show that you’re likely to pay the money back. Businesses look at your credit score – based on how much money you borrow, and how quickly you pay it back – to decide how much, if any, money they’re willing to lend you. Many newcomers have to establish and build credit as their financial histories aren’t necessarily carried over from their home countries. How do you build credit? Start by paying your utility and phone bills in full before they are due. When you set up your bank account, look into getting a credit card with a small limit, even if you have to prepay it. Make purchases you can afford, and pay off the card in full when it is due. These transactions are tracked and considered in your credit score. Learn more about credit scores and your credit report.
5. Make a financial plan
A financial plan looks at where you are today and where you want to go. It states your financial goals and sets out how you can reach them. How you plan depends on your knowledge and experience. Set some short-term and long-term goals and priorities and get the knowledge you need to make good money decisions to make the most of your first years in Canada. You may want to find a financial advisor who can guide you in managing your finances. Consider which type of advisor is best for you at this stage of integrating into your new life.
Summary
If you’re new to Canada, consider these 5 tips to help you manage your finances:
- Cover off immigration costs.
- Plan for a possible decrease in income.
- Look into your banking options.
- Build your credit score.
- Make a financial plan.
