Financial Essentials for Newcomers to Canada

Written By NewNakfa Team

Currency

In Canada, the official currency is the Canadian dollar (CAD). It includes both paper money and coins, with different nicknames:

  • Nickel: 5 cents

  • Dime: 10 cents

  • Quarter: 25 cents

  • Loonie: 1 dollar

  • Toonie: 2 dollars

Budgeting Expenses

When you start settling in Canada, your expenses may differ from what you're used to. It's important to budget your income to live within your means and achieve your financial goals.

Banking

Once you arrive in Canada, it's crucial to open a bank account as soon as possible. There are two main types of bank accounts:

  • Chequing Account: Used for daily transactions, such as paying bills and making purchases.

  • Savings Account: Used to save money and earn interest.

Most banks offer services specifically for newcomers, often available in multiple languages and with discounts.

Credit

Using credit allows you to borrow money, but you’ll be charged interest by the lender (usually a bank or credit card company). The interest rate is a percentage of the total amount borrowed, and the longer it takes to pay back the debt, the more interest you’ll pay.

  • Credit Cards: Let you borrow money up to a set limit that must be repaid. They’re important for building a positive credit history, which records your past loans, credit, and payments. However, it’s essential to stick to your budget and avoid large credit card expenses if you cannot repay them on time.

Taxes

Residents of Canada pay taxes to fund government programs and public services such as healthcare and education. If you are a resident, you must file an income tax return annually (usually before April 30) with the Canada Revenue Agency (CRA). Even if you had no income in a given year, you should still file your taxes, as doing so could qualify you for government benefits.

  • Tax Filing: Most jobs involve employers deducting taxes from your paycheque. For those who are self-employed, you’re responsible for paying your taxes directly. The Community Volunteer Income Tax Program offers free tax filing assistance. More information is available here.

Sending Money

Money can be sent back to your home country electronically or by money order. You can make international money orders at a bank or a post office, or use a third-party money order service. It's advisable to contact a newcomer services organization or conduct your own research to ensure you’re using a secure method to transfer money.

Fraud and Identity Theft

Newcomers may be targets of fraud and identity theft. Examples include attempts to steal credit card information or impersonating government services via phone or email to access your personal and financial information. The Canadian Anti-Fraud Centre provides more information here.

Financial Planning

Once settled in Canada, consider planning ahead for your family's future and investing. Examples of financial planning options include:

  • Registered Education Savings Plans (RESPs): For saving for your child’s education.

  • Registered Retirement Savings Plans (RRSPs): For retirement savings.

  • Tax-Free Savings Accounts (TFSAs): For saving money without paying taxes on the interest earned.

Consult your banking advisor for more information on these options. Additional details are available here.

Banking Products for Newcomers

Several banks offer specialized banking products and services for newcomers:

Understanding and managing your finances effectively is key to a successful transition and settlement in Canada.

NewNakfa Team
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