Are you new to Canada? Then you will know that every year thousands upon thousands of newcomers make their new home in Canada. And along with being very welcoming, Canada is also known as one of the most culturally diverse countries in the world.
Many immigrants sell everything in their native country to start a new life in Canada. Moving to a new country can be both really exciting and scary at the same time! In addition to getting settled into a new environment and culture, financial stability is one of the main priorities.
In this case, ignorance is NOT bliss. The more you know about the financial system in Canada – the better!
So, we got together three quick tips for you to get started:
1. Open a Bank Account
Major Canadian banks offer newcomer packages, which usually means they won’t charge monthly account fees for the first 6-12 months and they’ll give you discounts on selected financial products (ex. safety deposit box). Others may offer special credit cards and loans as well.
It can be overwhelming to figure out where to begin to start with a recommendation by a friend for someone at their bank – having a connection will help you ease into the system.
There are also some comparison sites that might help you make a better decision by shopping around for rates on mortgages, credit cards, savings products, etc. Here are a few popular ones: Ratehub, RateSupermarket and the Financial Consumer Agency of Canada.
What are some of the basic accounts you’ll need?
- Chequing account
- Savings account
- TFSA savings account
- RRSP savings account
Did you know: You can open a bank account in Canada even if you don’t have a job or any money to deposit right away?
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2. Build your Credit History
In Canada, there are two national credit bureaus which track your credit history. You can access your report at any time by contacting Equifax or Transunion. Based on your experience and past management with credit, they also calculate a credit score – the score represents your creditworthiness, and they generally range between 300 and 900. Over 700 is considered strong.
Improving your credit score is one of the best financial moves you can make! A strong credit score can help to negotiate better mortgage and loan rates, as well as more easily qualify you for certain types of insurance or renting an apartment. Often, it will also entice institutions to offer you more access to loans for starting a business, investing etc.
This is how you can build your Credit History in Canada:
- Apply for a credit card as well as a line of credit. Having different types of credit helps.
- Use small amounts (less than 30%) at any given time. Using high levels of your credit (70% or more) leaves you susceptible to going over the limit if there’s an emergency. Staying at the lower levels shows lenders that you have good discipline and won’t spend it just because you have it.
- Pay the full amount at every due date (usually monthly). Late payments will negatively affect your score. Ask your credit card company to set up an automatic withdrawal from your bank account.
- Keep your oldest credit account. It is useful
- Monitor your credit regularly for inaccuracies or identity theft. There are now free tools such as creditkarma.ca or borrowell.ca which will give you your credit score every month. It will also give you a summary of the details on your credit file. Once a year, it’s also worthwhile asking Equifax or Transunion to mail you a paper copy of your credit file.(If you want to learn more about this, you can watch this!)
3. Hire a Financial Planner
When you move to a new country the idea of investing for the future may not be a priority. However, it is very necessary to familiarize with various investment options and complex tax system in Canada. Hire a financial planner to chalk out a plan for your future according to your needs.
Here’s what to look for in a planner:
- Look for a Certified Financial Planner ®. This designation represents the most technically qualified people in Canada when it comes to all 6 aspects of financial planning: investments, retirement, tax, insurance, estate and financial management.
- Find someone who charges a fee for unbiased advice. When the planner is compensated for their time rather than for selling a product, the quality of advice you will receive will be far superior. You will not be pressured into buying something. Be sure to ask for their compensation structure at the first meeting.
- Find a CFP® professional who will not only create a plan for you but also help you implement every aspect of it. They would connect you to all the professionals – insurance, investments, tax etc. and help you work with those specialists to achieve your objectives.
Are you new to Canada? I’d be happy to answer any of your questions! Please feel free to email me at firstname.lastname@example.org to set up a 30-min virtual coffee.