Overview
Newcomers in Canada face many different challenges, including navigating an unfamiliar culture, customs, and financial system. In this article, we will explore five smart tips to help newcomers thrive financially.
Tip #1: Open a Canadian Bank Account
Canada has five major banks, referred to as the Big Five: Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD Bank), Canadian Imperial Bank of Commerce (CIBC), Bank of Nova Scotia (Scotiabank), and Bank of Montreal (BMO). Choose the bank you’re comfortable with and open a chequing account for regular, everyday transactions as well as a long-term savings account for, as the name implies, long-term savings, which could be used for major purchases or building retirement savings.
Tip #2: Build Your Credit History
You can apply for a secured or newcomer credit card to help you get started. There are numerous ways to build a good credit history, including making your payments on time, having multiple older bank accounts open, establishing a track record of timely payments, and detecting any mistakes on your credit report early. These tactics will allow you to build a good credit history as time goes on. While it takes time, the payoff will be worth it, as a good credit history may give you access to better loan terms as well as making it more likely that you will qualify for a rental or mortgage.
Tip #3: Pay Your Bills on Time
This is perhaps the most important tool in your toolbox when it comes to establishing a sound credit history in Canada. If you don’t want ever to miss a payment due date, consider automating your bill payments. That way, the payment amount will be automatically debited from your chequing account on the payment due date, and you won’t have to memorize all the due dates. The key here is ensuring that you always have sufficient funds in your bank account to cover the necessary transactions such as bill payments. As mentioned in tip #2, a higher credit score that is likely to result from paying your bills on time may give you access to more favourable loan terms and will make it more likely that you will be able to qualify for a rental or a mortgage of your choosing.
Tip #4: Create a Budget
It’s essential to develop a budget, including your monthly income and expenses, particularly as someone who is new to Canada and may be unaccustomed to the cost of living here. Your expenses will likely include fixed expenses like housing and car insurance as well as variable expenses that may fluctuate from month to month. Minimizing unnecessary spending and prioritizing fixed expenses may help you stay on track financially.
Ideally, you would also set aside at least 10-15% of your income for future needs. If you have a long-term goal like buying a home or building your retirement savings, a regular savings habit will be critical to your success. Setting aside savings regularly requires discipline as well as positive cashflow, which, in turn, require balancing your income and expenses in a disciplined manner.
If you feel that there’s a mismatch between your income and expenses, either increasing your income or lowering your expenses – or both – could be the key to greater financial stability. You can raise your income by asking for a raise at your current job, earning a promotion, or retraining for a more lucrative career such as software development. Online courses, materials, and certifications are often available for a low cost or even for free and provide you with the skills needed to start a new, well-paying career. Lowering your expenses is a matter of reviewing your frivolous purchases, if any, and cutting them out or reducing them.
Tip #5: Establish an Emergency Fund
The importance of an emergency fund cannot be overstated, as life will inevitably throw curveballs at you, and you want to be prepared for such eventualities. Whether you suffer an unexpected job loss or have urgent car repairs you need to have done, being financially prepared for such occasions will go a long way toward improving your peace of mind.
Even a small amount of money set aside each week will accumulate over time. For example, $10 set aside every week will result in $500 saved over the course of 50 weeks, while $50 set aside every week will result in $2,500 saved over 50 weeks. Start small and progress from there. Ideally, you would have at least three to six months’ worth of expenses saved up in case of emergencies such as a job loss or car repairs.
Conclusion
If you’re ever unable to meet your monthly expenses, you may want to consider applying for a personal loan online via Crediteck. The application process is simple and straightforward and takes place entirely online for your convenience. We don’t check your credit score or credit report during our simple and fast online application process. Additionally, you may want to sign up for Credit Verify to monitor your credit health and automatically detect errors on your credit report, which may help you achieve a higher credit score.
