Financial Tips for New Canadians
Navigating Canada’s Financial System
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By Bromwich+Smith Staff | 1998 words | Reading Time: 10 minutes | Date: 2023/03/28
We understand that the financial system can be tricky to navigate at the best of times, and for the 431, 645 new permanent residents Canada received in 2022 it may be overwhelming. There is so much financial literature available and resources but how do you know what options are best for you and what rights do you have as a Canadian to better your financial situation? New Canadians are hesitant to reach out for help because they’re fearful. Many of our clients come from countries where it’s a crime to leave debts unpaid and they do not understand that Canadians have debt relief programs that can help them. Often, Newcomers see support from the Centre for
Newcomers to write a resume, find a job and a place to live, but there was not much information available on credit, budgeting or financial planning. Due to a lack of financial education for newcomers, there are many misconceptions and misunderstandings when it comes to how to manage debt in Canada.
Let's start at the very beginning and that always begins with a budget. If you are not familiar with budgeting it's an important financial tool to help you stay on top of where your finances are at having an understanding of the income coming in and the expenses that you need to pay each month are critical to avoid overwhelming debt and stressful situations.
- Understand what money is coming in each month. Simply put this means having an understanding of your employment income, financial aids, and any other money you receive on a monthly basis. This could come from a side hustle, renting out space in your house, or any other means.
- Understand your expenses. There are two types of expenses you need to understand one are the expenses that will not change month to month this could include your mortgage or rent, insurance, car payments, loan payments with a set dollar value etc. The second type of expenses are the ones that can change month to month these are the expenses that you can control and may be able to lower if you need to find additional income. These expenses can include entertainment costs, groceries, cell phone bills, cable bills, utilities, credit card debt and debt payments.
- Track your spending. Having an understanding of where you're spending each month will help you understand what you can cut down or reduce in order to have extra income for debt repayments, savings, or unexpected expenses. We highly recommend finding a budgeting app that works for you there are many different tools available either digitally or the old fashioned way with a pen and paper.
Understanding what money you have each month will help you plan for your financial future. It is important to be aware that your budget needs to change as your expenses or income change. This means if your income reduces you need to find where in your budget you can cut back on your expenses. Alternatively if your income increases you may have surplus income that you can now allocate to debt repayments, savings, or other resources.
Many Canadians struggle with the idea of setting savings aside especially when they are struggling with debt. It is so important to have money set aside for those emergency situations that tend to come up at the worst of times. For example if you lose your job do you have the resources to maintain your expenses until you are able to find new work? Although you may qualify for unemployment insurance it can take up to 6 to 8 weeks before you receive any money in your bank account. Are you able to pay for your rent your groceries and other bills in the meantime? If you're not you may find yourself struggling adding expenses onto credit cards or reaching out for a payday loan. Please avoid this these measures when possible as payday loans I have high interest and will cost you so much more money in the long run. If you continue to add debt onto your credit cards you will find additional interest and fees that you made struggle pingback later. So, how can you set up for savings?
- Start with setting up a savings account online banking makes it easy to automatically transfer money from a checking account to a savings account without you needing to step foot in the bake.
- Have a goal. What are you saving for? That will help you know how much money to set aside. Are you looking for an emergency savings
account that will get you through three months if you are not working? Are you looking to set money aside for a family vacation? Or are you looking to put away money into your retirement account by knowing what your goal is you'll be able to make positive steps and see the progress of your success.
- Grow your savings. Examine your budget if you have a surplus income anywhere you can redirect that money into your savings account. If you do not have surplus income you may need to examine where to cut back in order
Investing can be a strong resource to grow your net worth. You may consider reaching out to an investment specialist to find the best options for you. Some easy starting points would be to learn about the different types of investments and the risks involved in each.
We suggest starting with a diversified portfolio with low-cost funds and set realistic expectations you will not see major change right away be patient with your investments as they will take time to grow. Your financial advisor will be able to set you up for success and explain all of these timelines, and expectations for you.
Beware of scammers and identity thieves: Once you have a credit profile and available credit,
you could be a target of thieves looking to tap into your available balances. Be careful shopping
online and protect your credit card information at all costs. Never click on unknown links sent
to you by email or provide your banking or credit card information to people over the phone or
by email. The Government of Canada has several resources to help you avoid identity theft.
Know your rights when it comes to eliminating debt. In Canada you have the right for debt relief assistance, through the Bankruptcy and Insolvency Act . There are federally regulated debt relief programs to aid Canadians struggling with finances. Have there are many options available including debt consolidation loans, or credit counseling. in Canada only a licensed insolvency trustee can help you with a consumer proposal or bankruptcy . there are many organisations that will promise they can help relieve your overwhelming debt, but only a licensed insolvency trustee can file these programs for you. If you are looking for debt relief make sure to do your research first. Check out the companies Google reviews from current and past clients, end call the ones that you feel most comfortable with. You should be able to have a no obligation consultation and have all your debt relief options explained to you. At Bromwich plus Smith we will explain the best options available even if that means you don't need our services. Not everyone who calls in qualifies for or should file for a consumer proposal or bankruptcy. Many people just need to know where to find the right information and we're more than happy to share our knowledge with you. We want to ensure that you succeed in your financial future regardless if you're a client of ours or not.
Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page.
1- What is a credit score and why is it important for Canadians?
A credit score is a number that explains your creditworthiness based on your credit history essentially it determines if you are eligible for credit including credit cards, mortgages, loans or other financial products. A good credit score will help you qualify for better interest rates and give you more options to obtain credit. It is important to know that having a low credit score doesn't mean you're ineligible for credit. You may need to prove that you are capable of paying off the credit your asking for or you made have higher interest rates until your credit score increases.
2- How can I check my credit score?
You can check your credit score for free through one of Canada's credit bureaus including Equifax or TransUnion. You can also sign up for credit card updates and check your credit score on a regular basis, we suggest checking once a year to ensure there's no fraudulent activity on your report.
3- How can I increase my credit score
It typically takes six months to establish credit history in Canada but that will vary depending on your credit habits and financial past. You and can increase your credit score by ensuring your payments are made on time, have a low debt to income ratio and avoid applying for too much credit at once. Things that may impact your credit score negatively include missed bills payments, debt that goes to collections, minimum payment history call my low credit utilization, length of credit card history and too many credit checks.
4- What is a hard credit check?
When it comes to credit checks there are two terms you need to be familiar with a soft credit check or inquiry which is something only you can see including promotional offers, employment verification or checks you have made on your own credit report. A hard credit check or inquiry will affect your credit score Anne will stay on your report for two years. This includes when a creditor does age background check on your credit before a loan application car payment, mortgage request etc.
5- What are some common financial mistakes that new Canadians make, and how can they be avoided?
Some common financial mistakes that new Canadians make include not saving enough money for emergencies, overspending on credit cards, and not understanding Canadian tax laws. To avoid these mistakes, it's important to educate yourself on the Canadian tax laws and regulations, set up an emergency fund, use credit responsibly, and create a budget and financial plan.
6-What are some tips for managing debt and avoiding debt traps?
Tips for managing debt and avoiding debt traps include creating a budget and understanding what your expenses are, paying off high-interest debts first, consolidating debts into one lower-interest loan, and avoiding taking on more debt than you can afford. Try paying off credit cards in full each month and when that's not possible do not carry more than 50% of your allotted credit at a time.
7- What Financial tools are available to newcomers in Canada?
Financial tools and resources available to new Canadian residents include online banking and mobile apps for tracking expenses and managing accounts, credit monitoring services for tracking credit scores, and financial literacy programs offered by banks and government agencies.
9- What are the tax implications for new Canadian residents, and how can they be minimized?
The tax implications for new Canadian residents include paying federal and provincial taxes on income earned in Canada, as well as taxes on any capital gains or investment income. To minimize taxes, it's important to take advantage of tax-advantaged savings accounts and seek advice from a tax professional.
10-What are some strategies for managing and reducing expenses as a new Canadian resident?
Strategies for managing and reducing expenses as a new Canadian resident include creating a budget and tracking expenses, reducing unnecessary expenses like eating out or subscription services, and finding ways to save on essential expenses like groceries and utilities.
11- How can new Canadian residents protect themselves financially and plan for unexpected events, such as job loss or medical emergencies?
To protect themselves financially and plan for unexpected events like job loss or medical emergencies, new Canadian residents should consider building an emergency fund, purchasing insurance including life, health, or disability insurance, and creating a contingency plan for unexpected expenses. It's also important to seek advice from a financial advisor or credit counselor to create a comprehensive financial plan.
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