Before successfully immigrating to Canada, you must financially plan your move. There are several financial details that you would need to understand. Creating a detailed financial plan to navigate Canada successfully is important.
Living in Canada can be very expensive, especially for immigrants. The financial system may be quite different from the one in your home country, so it is important to plan your move financially.
You must have a basic understanding of finances in Canada and how to manage and plan a budget for your expenses.
You will also need to know the details of the living expenses in Canada, as they may differ from those in your home country.
Financially Planning Your Move
1. As someone who will be immigrating to Canada, you must have all your financial paperwork ready. You will be required to provide detailed financial information on all your financial assets.
2. Immigrating to Canada, you will need a local bank account. This account helps you get loans, credit cards, and even mortgages.
3. You will also need to show your proof of funds. For skilled workers immigrating to Canada, proof of funds is one of the requirements for a visa application. A valid bank or any accredited financial institution provides the proof of funds.
4. While immigrating to Canada, it is advisable you have some money on you. While cash is advised, keep most of your money in checks, bank drafts, or bank orders because you are expected to be traveling with $10,000 or less. However, in a case where you have more than $10,000, you are to declare this to the border officer when you arrive in Canada. The amount of cash you travel with depends on your living expenses.
5. Understand and consider the costs you would incur in Canada. Housing and living expenses are some of the most important expenses that should be budgeted. Have a financial plan for your housing plan. If you are renting a home, you would be required to pay a refundable deposit of around one-half of one month’s rent upfront. If you are buying a home, you may need a real estate agent in Canada to help guide you through your purchase.
6. Living expenses in Canada may be quite different from those in your home country. In Canada, living expenses include internet, electricity, water, and heating. You would also include food, clothing, and a cell phone.
7. Transportation: While the cost of transportation in Canada may vary based on the location of your home, it is also important that you make a financial plan for your transportation. You may decide to own a vehicle, such as a car or a bike. Owning a vehicle in Canada is also a cost you must budget for as you are immigrating to Canada.
8. For foreign students immigrating to Canada, you must consider the cost of living as a student. Understand the amount you are required to have in your account for your student visa application because living in Canada can be very expensive.
9. Miscellaneous: When immigrating to Canada, you must plan for miscellaneous expenses. These include prescription drugs (until you get your provincial health insurance), temporary housing plans, and school supplies.
10. You can also set aside some money for fun or extra activities.
Arriving Canada
When you have successfully financially planned your immigration process, arriving in Canada will not be stressful. Most people get stressed out in the first few months of their arrival because they are swamped with the stress of balancing their finances in Canada.
Once You Arrive in Canada
1. Meet a financial advisor to discuss your finances and banking options. This could be from any bank of your choice.
There are five major banks in Canada: Scotia Bank, TD Bank, Regal Bank of Canada (RBC), Bank of Montreal (BMO), and the Canadian Royal Bank of Commerce (CIBC).
There are also smaller financial institutions called Fintechs, which include KOHO, Wealthsimple, and Questrade. These companies often specialize in one aspect of finances, such as investments or chequing accounts.
Credit unions, too, are member-owned financial institutions that are typically even more localized than national banks. Still, they offer many services similar to those of banks.
2. You would be advised to open savings and chequing accounts for your everyday expenses and purchases. First, you must understand the different accounts used in Canada and their purpose.
Investment Accounts
In Canada, there are about three registered and popular investment accounts; the registered retirement savings plan (RRSP), the tax-free savings account (TFSA), and the First Home Savings Account (FHSA).
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- RRSP
This is an account used to save for retirement in Canada. It is mostly preferred in Canada because money or stocks saved in RRSPs are tax deductible, which means that these accounts can help reduce the amount of income tax you pay each year. All investments in an RRSP are usually free of tax until withdrawal, which is in retirement.
- TFSA
This account is not tax-deductible, meaning that all savings made in the TFSA are made with after-tax dollars. However, all investment interests and dividends earned in the account are tax-free, and withdrawals from a TFSA are also tax-free. The TFSA is a preferred option for both long-term and short-term investment goals.
- FHSA
The FHSA is a preferred account for savings toward your first home purchase in Canada. It allows you to save up to $8,000 per year and $40,000 in total toward your first home purchase. The money or stock saved in your FHSA account is tax deductible, and your withdrawal for your home purchase is tax-free.
Bank Account
- Savings accounts
Savings accounts are bank accounts for your savings. But unlike investment accounts, money saved is not tax-free. Savings accounts only allow you to save money, unlike investment accounts, which allow you to save money or stocks. This account is preferred for saving short-term goals or emergency funds.
- Chequing accounts
A chequing account is used for everyday expenses. It allows you to make daily purchases and payments and comes with a debit card that allows you to access your money.
3. The savings accounts are for your savings. You will also be advised to get a credit card, but you must properly understand how finances work in Canada.
4. For skilled workers who immigrated to Canada, you will be required to pay your taxes. You can find an accountant to help you out with your taxes if you can’t.
5. To use your credit card responsibly, always pay your bills on time and pay them off monthly. This helps build your credit score in Canada, which can help you get loans and mortgages. Your credit score from your home country doesn’t matter; you are in a new country, so your credit score is a new one.
Conclusion
Planning is vital for every step. It is said that if you fail to plan, you plan to fail. By financially planning your move before immigrating to Canada, you’re building a financial success story.
