Personal Finance

Canadian Finance: Key Tips for New Immigrants To Canada

Empower yourself with crucial financial tips for new immigrants to Canada. Explore practical advice on budgeting, saving, and investing in Canada.
Bruce Hodges
April 23, 2024
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Table of Contents

Canadian Finance: Key Tips for New Immigrants To Canada

Canada is known for its stunning landscapes, friendly people, and abundance of opportunities, making it an attractive destination for new immigrants. However, starting a new life in a new country does come with its challenges, especially when it comes to navigating the financial landscape. That's why it's important for new immigrants in Canada to have a solid understanding of the country's financial system.

Key Highlights

  • Familiarize yourself with major banks in Canada like RBC, CIBC, BMO, TD, and National Bank.
  • File an income tax return annually, regardless of income.
  • Understand federal, provincial, sales, and property taxes, and determine your residency status for tax purposes.
  • Consider income support programs like employment insurance and social assistance if needed.
  • Track income and expenses, prioritize spending, and look for ways to save money.
  • Take advantage of registered accounts like RRSPs and TFSAs for retirement savings and other financial goals.

Finance Tip #1: Understanding the Canadian Banking System

One of the first steps for new immigrants to Canada is to understand the Canadian banking system. Understanding the basics, as well as any notable differences compared to your home country, will equip you for long-term success.

Start by familiarizing yourself with the major banks in Canada. You'll want to open a bank account as soon as possible to start accessing banking services, manage your finances, and receive your salary or government benefits.

By doing a bit of research, you can start to understand the different options and features each bank has. Take a look at:

Some key factors to consider when choosing a bank include:

  • Tailored Packages and Services: This is important for getting started on the right foot financially, especially if you're new to the country. Banks that offer specialized services for immigrants can provide valuable support and guidance.
  • Convenience: Proximity and operating hours are crucial, especially if you prefer in-person banking. Being able to access branches easily can make banking more convenient for you.
  • Fees: Carefully evaluate fee structures and potential limitations to avoid unnecessary or unexpected charges.
  • International Transfers: If you anticipate needing to transfer money internationally, having cost-effective options available with your bank can save you time and money in the long run.
  • Additional Features: Assessing additional perks such as discounts, insurance options, and rewards can add value to your banking experience, depending on your personal needs and preferences.

Finance Tip #2: Build a Canadian Credit History

A credit history is a record of your borrowing and repayment habits, and it is used by lenders to assess your creditworthiness when you apply for loans, credit cards, or other forms of credit.

Here's how you can start building a Canadian credit history:

  • Obtain a Social Insurance Number (SIN) and a permanent resident card, as these are required to apply for credit.
  • Open a Canadian bank account and use it responsibly. Make regular deposits and withdrawals, pay bills on time, and maintain a positive account balance.
  • Apply for a credit card designed for newcomers or secured credit cards, which require a security deposit but can help you establish credit.
  • Make small purchases using your credit card and pay off the balance in full each month to demonstrate responsible credit use and build a positive credit history.

Building a Canadian credit history takes time, but it is an important step towards accessing financial opportunities and achieving your goals in Canada. It's important to start building your credit as soon as possible. Time is a factor, so the longer your credit history is, the better.

Finance Tip #3: Learn About Tax Obligations in Canada

As a resident of Canada, you are required to file an income tax return every year, even if you have no income or have not yet started working.

  • Familiarize yourself with the Canadian tax system and the different types of taxes, such as federal and provincial income taxes, sales taxes, and property taxes.
  • Determine your residency status for tax purposes, as it will affect how much tax you need to pay and what deductions and credits you are eligible for.
  • Keep track of your income and expenses throughout the year, as you may be eligible for deductions and credits that can reduce your tax liability.

It is recommended to consult with a tax professional or use tax preparation software to ensure that you meet your tax obligations and take advantage of any available deductions and credits.

Finance Tip #4: Explore Employment and Income Support Programs as a Newcomer

Finding employment and accessing income support programs are top considerations for new immigrants to Canada. Here are some key points to keep in mind:

  • Research the local job market and identify industries that are hiring and in-demand. Use resources such as government websites and labour market information to gather information on job opportunities.
  • Familiarize yourself with employment programs and services offered by the Government of Canada, such as job banks, job fairs, and employment agencies that specialize in newcomer employment.
  • Explore income support programs, such as employment insurance and social assistance, which can provide temporary financial support if you are unable to find employment immediately.
  • Network with professionals in your field, attend industry events, and consider volunteering or internships to gain Canadian work experience and expand your professional network.

Finance Tip #5: Budget Wisely to Manage Living Expenses

Creating a budget is essential for managing living expenses in a new country. Here are some key points to keep in mind:

  • Track your income and expenses to understand your financial situation and identify areas where you can reduce spending or save money.
  • Prioritize your expenses based on your needs and allocate a set amount to each category, such as housing, transportation, groceries, and entertainment.
  • Look for ways to save money, such as cooking at home, using public transportation, shopping for deals, and using coupons or loyalty programs.
  • Set financial goals and save a portion of your income regularly. Consider opening a savings account specifically for this purpose.
  • Review and adjust your budget regularly as your financial situation and priorities may change over time.

Budgeting wisely will allow you to  effectively manage your living expenses and have greater control over your financial situation in a new country.

Finance Tip #6: Save and Invest in Registered Accounts

Saving and investing in registered accounts is an important step towards building wealth and securing your financial future in Canada. Here are some key points to keep in mind:

  • Take advantage of registered retirement savings plans (RRSPs), which offer tax advantages and allow you to save for retirement.
  • Consider opening a tax-free savings account (TFSA), which allows you to save and invest money without paying taxes on the growth or withdrawals.
  • Explore other registered accounts, such as registered education savings plans (RESPs) for saving for your children's education or registered disability savings plans (RDSPs) for individuals with disabilities.

Finance Tip #7: Send and Receive Money Internationally Wisely

Sending and receiving money internationally is a common need for new immigrants. Here are some key considerations to ensure you do so wisely:

  • Research the different options for sending money internationally, such as banks, remittance services, or online money transfer platforms.
  • Compare fees, exchange rates, and delivery times to find the most cost-effective and convenient option for your needs.
  • Be aware of any restrictions or regulations around sending and receiving money internationally, both in Canada and in your home country.
  • Consider using settlement services or community organizations that specialize in assisting newcomers with money transfer services.

Finance Tip #8: Plan for Retirement Early

Planning for retirement is important, even for new immigrants to Canada. Here are some key points to consider:

  • Start saving for retirement as early as possible to benefit from the power of compound interest.
  • Take advantage of employer-sponsored retirement savings plans, such as registered pension plans or group registered retirement savings plans (RRSPs), if available.
  • Look into debt consolidation options if you're in debt, but still want to prioritize saving for retirement. Platforms like Parachute can help make your debt more manageable while empowering you to build a strong financial future, even if you're a new immigrant to Canada. Learn more today!
  • Regularly review and adjust your retirement savings strategy as your financial situation and goals change.

Frequently Asked Questions

What are the best ways to transfer money internationally?

There are different options for transferring money internationally, including banks, remittance services, and online money transfer platforms. Research the fees, exchange rates, and delivery times to find the most cost-effective and convenient option for your needs.

How do taxes work in Canada for immigrants?

As a new immigrant to Canada, you are required to file an income tax return every year, even if you have no income or have not yet started working. It’s important to determine your residency status for tax purposes, and keep track of your income and expenses throughout the year in order to be prepared.

Are there specific financial programs for new immigrants?

Yes, there are specific financial programs and services available for new immigrants in Canada. You can start by taking a look at the Government of Canada’s Resettlement Assistance Program.

Bruce Hodges
Bruce, Founder and CEO of Parachute, worked for several of Canada’s top Banks, published research for the Canadian Bankers Association, and taught E-commerce Strategy in Wilfrid Laurier University’s MBA program. His first start-up built credit solutions for the likes of National Bank, Fair Isaac, and Ford Credit globally. Prior to starting Parachute, Bruce was COO of Foresters Financial, and EVP Transformation at CIBC, one of Canada’s top 5 banks. Bruce founded Parachute to disrupt the financial wellness space taking on payday, and high interest predatory lenders, with the intent to bring at risk Canadians back from the brink to good financial health.
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