{ "id": 1798, "date": "2023-02-10T23:06:07", "date_gmt": "2023-02-11T04:06:07", "guid": { "rendered": "https:\/\/aucanadavisa.com\/?page_id=1798" }, "modified": "2023-02-22T17:16:21", "modified_gmt": "2023-02-22T22:16:21", "slug": "how-to-manage-your-finances", "status": "publish", "type": "page", "link": "https:\/\/aucanadavisa.com\/en_ca\/useful-infos\/settling-in-canada\/how-to-manage-your-finances\/", "title": { "rendered": "How to manage your finances" }, "content": { "rendered": "
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In this guide, we\u2019ll give you the best tips for managing your budget as a newcomer to Canada. Whether you\u2019ve recently arrived or you\u2019re just planning your move, these tips and tricks will help you manage your income and expenses, plan for your long-term success, and enjoy all the benefits of life in Canada.<\/span><\/h2><\/div><\/div>

#1 \u2013 Give yourself an adjustment period & save up an emergency fund<\/h4>

You\u2019re starting life in a new country. It may take time to adjust to the new culture.\u00a0Be easy on yourself.\u00a0<\/strong>Mentally prepare yourself to encounter some challenges, both expected and unexpected, and remember that every challenge presents an opportunity for growth!<\/p>

Maybe you didn\u2019t realize that Canadian income is heavily taxed? Or maybe you don\u2019t like the apartment you\u2019ve moved into and you decide to move to a different neighbourhood? Any number of surprises can come up when you move to a new country.<\/p>

These types of challenges happen. Learn from them, but don\u2019t judge yourself. Also, try to save up an emergency fund in advance of your move. Having a chunk of money set aside for unexpected emergencies and financial surprises can help you navigate your first few months in Canada. Three months\u2019 salary is a good target for your emergency fund, but depending on your financial situation and the comparative salaries between your home country and Canada, you may have to adjust.<\/p>

#2 \u2013 Prepare for Canadian income tax and deductions<\/h4>

Understanding your income is the first step in budgeting, and income in Canada might be different from what you\u2019re used to.<\/p>

Depending on where you\u2019ve lived in the past, you may be surprised to see how much of your Canadian income is deducted for income tax and other contributions. 25% or more of your income is missing? Check the deductions on your paycheque! Taxpayers (that\u2019s you!) help to fund Canada\u2019s robust healthcare system and a variety of social services, so prepare to pay your share.<\/p>

A portion of your income will be deducted for\u00a0federal and provincial income taxes<\/a>\u00a0and the Canada Pension Plan (or the Quebec Pension Plan, if you live in Quebec). A portion of your income will also be deducted for Canada\u2019s Employment Insurance (EI) program. This provides financial assistance to unemployed workers in Canada, as well as to those who are sick, pregnant, caring for a new child, or caring for a sick family member. If you become unemployed or decide to have a kid, you too may benefit from EI.<\/p>

Just to give you an idea, an Ontario resident with an income of CAD$60,000 per year in 2020 would have had approximately $15,000 of this income\u00a0deducted for income tax<\/a>,\u00a0CPP, and EI contributions<\/a>. Disclaimer: Income tax can vary greatly depending on your individual circumstances, so please do your research to determine what to expect for your province of residence and personal income tax circumstances \u2014\u00a0this government resource is a great place to start<\/a>.<\/p>

To manage your income and expenses in Canada, you\u2019ll need a bank account. Moving2Canada is happy to recommend HSBC Bank Canada \u2014 helping you open up a world of opportunities. You can open your account online \u2014 even if you\u2019re not yet in Canada.<\/p>

Open up a world of opportunities with HSBC Bank. Get up to $1,500<\/strong>* in value.\u00a0Start here<\/a>.<\/em><\/p>

#3 \u2013 Calculate your expenses in Canada<\/h4>

So, you\u2019ve calculated your income in Canada. Next step \u2014 where are you going to spend it all?<\/p>

For first-time budgeters, an easy place to start is the \u201850\/30\/20 rule\u2019, popularized by U.S. bankruptcy expert, Elizabeth Warren. Start by calculating your income\u00a0after taxes and deductions<\/em>. Spend 50% on your\u00a0needs<\/em>\u00a0(housing, groceries, transportation), spend 30% on your\u00a0wants<\/em>\u00a0(new shoes, dinners out, hockey tickets), and the remaining 20% is for\u00a0savings & debt repayment<\/em>\u00a0(downpayment for a house, college savings, retirement funds).<\/p>

With the 50\/30\/20 rule guiding you, take the time to determine your expenses, not forgetting the little things that add up, such as your monthly fixed costs (insurance products, cell phone), your regular subscriptions (gym, Netflix, etc.), and the weekly take-out pizza you might be treating yourself to.<\/p>

Housing, transportation, and utilities (internet, heating, electricity), will vary greatly depending on where you live. For example, the cost of housing in Toronto is much higher than in Calgary. Make sure you\u00a0plan accordingly for your destination in Canada.<\/p>

As well, prepare yourself for some Canadian oddities! For example, do you have regular medical expenses? You\u2019ll want to\u00a0research your health care coverage in Canada. Certain medical expenses are covered by the publicly-funded health care system, but not all of them.<\/p>

#4 \u2013 Build a financial calendar for your first year in Canada<\/h4>

Building a financial calendar based on monthly or seasonal income and expenses can be a great way for anyone to manage their budget, but as a newcomer it can be an especially powerful exercise. Now that you\u2019ve completed steps #1-3, it\u2019s time to test your knowledge!<\/p>

\"Desk

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Building a financial calendar is a great way to test your financial planning skills.<\/figcaption><\/figure>

Go through the next year, month by month, and write down all of your expected net income and expenses. A simple spreadsheet will do the trick. Don\u2019t forget to account for seasonal expenses. Your first Canadian winter might necessitate buying winter tires for your car, warm boots for your family, and paying more to heat your home. Summers? Well, don\u2019t forget to budget for a little family vacation \u2014 no better time to explore all Canada has to offer than in the glory of the summer!<\/p>

#5 \u2013 Start building your credit history and credit score<\/h4>

A\u00a0credit score\u00a0is a three-digit number that lenders will use to determine whether or not you qualify for certain types of loans and credit-based purchases. Want to get a mortgage for a house? Or a loan for a car? You\u2019ll only be authorized to make these purchases based on your credit score.<\/p>

Getting a good credit score is all about building a good credit history. Show that you can make purchases and manage payments using credit. One of the simplest ways to start building your credit is by getting a credit card, just be sure you make your monthly payments on time and try not to use the entire limit on your card.<\/p>

With HSBC Bank Canada, you can qualify for a credit card with a limit of up to CAD$5,000 without having any credit history in Canada. This can provide you with the foundational tool you need to begin building your credit history in Canada. It could be your first step towards\u00a0purchasing property in Canada\u00a0later on.<\/p>

Learn more<\/a>\u00a0about the HSBC Bank Canada\u2019s chequing accounts for newcomers and find out how you could qualify for a credit card with a balance of up to $5,000 without any credit history in Canada*, PLUS a full annual fee rebate for the Primary Cardholder for the first year** ($149 value). Must apply by April 4, 2022. Conditions Apply.<\/em><\/p>

#6 \u2013 Plan for the long term through investments and savings plans<\/h4>

We know that you\u2019re still early in your Canadian journey, but it\u2019s never too early to start planning for the future. Maximize your savings by utilizing special savings plans and investing options that are most popular in Canada.<\/p>

A\u00a0Registered Retirement Savings Plan (RRSP)<\/strong>\u00a0can help supercharge your savings for retirement \u2014 plus, RRSP contributions are tax deductible, which could help you reduce the amount of income tax you pay.<\/p>

A\u00a0Registered Education Savings Plan (RESP)<\/strong>\u00a0can help you save for your children\u2019s education, with your own contributions being supplemented by contributions from the government!<\/p>

A\u00a0Tax Free Savings Account (TFSA)<\/strong>\u00a0can enable you to save your money and invest it \u2014 tax free! Each year, you can contribute savings to your TFSA. These deposits are not deductible for income tax purposes \u2014 up to a certain limit. Plus, you don\u2019t have to pay tax on investment income earned by your TFSA.<\/p>

As a newcomer to Canada, HSBC Bank can support your journey. They provide the flexibility to put your minimum deposit in any account combination, that means your money can grow in RRSPs, TFSAs, and more, rather than sitting in a chequing account. Plus get $0 monthly chequing account fees*.<\/p>

Get started with the HSBC Newcomers program, commence by opening a chequing account and you can earn up to $1,350* in value. Open up a world of opportunities with HSBC Bank.\u00a0Start here<\/a>.<\/p>

HSBC Bank Canada is not responsible for maintaining the content on this site. Please click on the Start Here link for the most up to date information.<\/sup><\/p>

*Conditions & eligibility criteria apply. Offer ends on April 4, 2022. Issued by HSBC Bank Canada.<\/sup><\/p>

**HSBC World Elite Rewards Program or HSBC Premier World Elite Rewards Program Terms and Conditions apply.<\/sup><\/p><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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