Finances

Embarking on a new life in Canada involves more than just packing your bags. Understanding the financial landscape is critical to a smooth transition. From setting up a bank account to managing taxes, sending money to your loved ones, and exploring investment opportunities, this guide will equip you with the knowledge you need to secure your financial future.

Taking Care of Your Finances as a Newcomer to Canada

Navigating the financial landscape of a new country can be daunting, but with careful planning and the right information, it can be a smooth transition. Here are some tips to help you manage your finances as a newcomer to Canada.

Opening a Bank Account

Opening a bank account is one of the first steps to establishing your financial life in Canada. Research different banks to find one that aligns with your needs. Consider factors such as fees, services, and the availability of branches and ATMs in your area. Be prepared to provide the necessary documentation, including your passport, visa, and proof of address.

Understanding Canadian Taxes

Familiarizing yourself with Canadian tax laws and regulations is crucial. Understand the tax filing deadlines and the types of income that are taxable. It's advisable to consult with a tax professional or use tax software to ensure accurate filing. Timely tax returns will help you avoid penalties and ensure compliance with Canadian tax laws.

Building Credit History

Building a good credit history is essential for accessing various financial services in Canada. A credit card can be useful for establishing a credit history, but it's important to use it responsibly. Pay your bills on time and avoid excessive debt to maintain a positive credit score.

Budgeting

Creating and sticking to a budget is a fundamental aspect of financial management. Track your income and expenses to understand your spending habits. Identify areas where you can cut back and allocate funds for essential needs and savings. Establishing an emergency fund can provide a financial cushion for unexpected expenses.

Insurance

Understanding the Canadian healthcare system and obtaining appropriate insurance coverage is vital. Research the different types of health insurance available and choose a plan that suits your needs. If you own a home or a vehicle, it's crucial to have adequate property and auto insurance to protect your assets.

Choosing a Bank in Canada

Top Banks in Canada

There are five major banks in Canada. They are:

1. Royal Bank of Canada (RBC)
2. Toronto-Dominion Bank (TD)
3. Bank of Nova Scotia (Scotiabank)
4. Bank of Montreal (BMO)
5. Canadian Imperial Bank of Commerce (CIBC)

These five banks provide similar services including savings accounts, safety deposit boxes, and credit cards among the few. Choosing a bank in Canada will ultimately be determined by what's important to you or which banks suit your needs.

Factors to Consider When Choosing a Bank

Some great factors to consider could be:

• Fees and Interest Rates: These will vary from bank to bank. Consider choosing the bank with the most favorable rates according to your banking habits.
• Branch and ATM Access: Accessibility to your money are important, especially when first arriving in Canada, especially if you're using public transport to get there. The ATM fees are quite important too.
• Minimum Deposit and Balance Requirements: If you have a certain balance, some banks may remove account fees. Try choosing a bank according to your budget and estimated monthly expenses to avoid any extra charges.
• Online Banking: All five banks do offer online banking, however, you could choose according to the features that are linked to each bank. The app or online bank website should suit your everyday needs.
• Perks: Also check if any of the banks are offering any sort of promotion at the time or special discounts for signups or immigrants.
• Customer Service: When facing any issues, you want the bank to be able to assist you efficiently. Being new to Canadian banks, you may have many questions that need to be answered by someone who is patient and helpful.

Sending Money Home From Canada

Sending money internationally has become easier over the years. You need to keep an eye out for the fees that come along with sending the money. The best options would be the one that allows you to send money home with the least amount of fees and the quickest arrival time of the funds received at the other end.

Below are a few affordable ways to send money from Canada to your home country.

Western Union

Western Union is a third-party money transfer option providing competitive rates and low transfer fees. You can send money to over 200 countries and territories. You're able to send money online, by phone call or via their mobile app.

Each country has its own list of restrictions on the amount being sent or received. The transferring fees are relatively low, however, it does depend on the amount being transferred.

XE Money Transfer

XE Money Transfer is another great way of transferring money to around 170 countries, most of which have same-day transfers. The online company is quite well-known for having some of the best exchange rates on the market.

Advantages include:

• Have your own private account on the website
• They don't charge any additional fees to send your money
• Can monitor your account 24/7; and
• Have 24-hour tracking on your money transfers.

OFX

OFX is another company that doesn't have any transfer fees when transferring money to another country. Transfers can be done via debit card or wire transfer. The receiver of the money, however, is limited in choice. Money can only be deposited directly into the receiver's account.

Depending on the country, transfers can take one to five days. This is still a great option as they support 55 different currencies, including currencies in Mexico, China, Pakistan, and Indonesia.

CurrencyFair

CurrencyFair is known and trusted globally. Setting up an account with them is easy, quick, and free. You can send and receive money from over 150 different countries. Two great features on CurrencyFair are:

• ChatBot: Online tool available 24/7 for when you may have questions or need to work through issues in real time.
Automatic Transfers: You'll be able to set up automatic transfers up to two weeks in advance.

Invest in Your Future in Canada

Opening a Tax-Free Savings Account (TFSA) is a way for individuals in Canada who are 18 years and older to save tax-free money throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed to the account or earned through investment income or capital gains is generally tax-free, even when withdrawn.

Investments Permitted in a TFSA include:

• Cash
• Mutual funds
• Securities listed on a designated stock exchange
• Guaranteed investment certificates
• Bonds
• Certain shares of small business corporations

Who Can Open a TFSA?

Anyone 18 years of age or older and with a valid Social Insurance Number (SIN) can open a TFSA account in Canada. There are, however, certain provinces and territories where the legal age to open a TFSA is 19.

If you contribute while you're a non-resident, you'll be subject to one percent tax for each month the contribution stays in the account. You may also be liable for other taxes.

Types of TFSAs

The three types of TFSAs that can be offered are as follows:

• A deposit
• An annuity contract
• An arrangement in trust
• Banks, insurance companies, credit unions, and trust companies can all issue TFSAs

You can also set up a self-directed TFSA if you prefer managing your investment portfolio.

FAQs

Do I Need a Canadian Bank Account to Work in Canada?

Legally, you don't need a Canadian bank account. It can, however, be very beneficial to you in terms of processing payments, paying taxes, or building a credit history. Everyone employed is required to pay taxes, so if you don't have a Canadian bank account, you'll have to pay it by wire transfer to the Canada Revenue Agency.

Do I Need to Be a Canadian Permanent Resident to Open a Canadian Bank Account?

No, you don't need to be a Canadian permanent resident to open a bank account in Canada. Canadian banks allow people to open a bank account even if:

• You don’t have a job
• Don't have money to put in the account right away
• Have been bankrupt

You need to make sure you go to the bank in person and carry an acceptable form of identification.