New To Canada? Here Is Your Ultimate Newcomer Financial Checklist

Posted on April 30, 2021

Are you moving to Canada soon? Do you need to set up your new life as a Canadian? Do you have all of the financial tools you need to start your journey?

If not, don't worry. We're here to guide you along the way with our newcomer financial checklist.

Best Banks for Newcomers to Canada

One of the first things that you're going to want to take care of is opening a new bank account. In Canada, there are two main forms of bank accounts; a chequing account and a savings account.

A chequing account holds all of the money that you're going to use for day-to-day transactions as it is the account that your salary goes into. Your new bank should give you a debit card so that you can make payments from your bank account or withdraw money at an ATM.

The chequing account also allows you to make purchases with cheques.

Savings accounts allow you to save money over time. These are where you'll keep funds for longer periods of time and earn interest. You can transfer money from your savings account into your chequing account and vice versa. 

What Types of Services and Account Features Should a Newcomer Look for in a Bank?

As a newcomer, you'll want to look for banks that don't charge monthly fees. You could pay anywhere from $4-$30 a month in fees if you're not careful.

We recommend looking at opening an account with a local credit union or a digital bank like Tangerine if you want to avoid these fees.

Some banks offer banking packages for newcomers that offer no-fee accounts for 12 months. But, you'll eventually end up paying for these accounts later.

You should also look for a bank that offers a high-interest rate on your savings.

RRSPs, TFSAs, and RESPs

Before we dive into each of these terms, let's clear up the acronyms:

  • RRSP stands for Registered Retirement Savings Plan
  • TFSA stands for Tax-Free Savings Account
  • RESP stands for Registered Education Savings Plan

RRSPs

RRSPs, can help you save money for your retirement. In 2021, you can contribute up to 18% of your income or $27,830, whichever amount is lower; contribution limits may change yearly.

You won't have to pay taxes on these investments until you pull them out of the account when you retire. And, because you'll likely be in a lower tax bracket when you retire, you'll pay less taxes later.

TFSAs

Funds in a TFSA won't be subject to tax. Each year the government releases a contribution limit, which is the maximum amount you can deposit in your TFSA for that year. You can earn interest on your TFSA funds or purchase investment vehicles including stocks and bonds. You won't be taxed on your capital appreciation within the account.   

RESPs

RESPs, can help you plan for your child's education. You can contribute to the account from the child's day of birth to the day they turn 18 years old.

The government will match your contributions every year at 20% up to a maximum benefit of $500 per year. This means that you should contribute up to $2,500 per year into their RESP account to receive the maximum $500 grant, which is called the Canada Education Savings Grant (CESG).

Each child that you have can receive up to $7,200 from CESG.

Best Credit Cards for Newcomers to Canada

Along with your accounts, you need to think about credit cards. These little cards will help you build credit.

But, we aren't going to dive into the world of credit scores just yet. Let's talk about credit cards and then go into how they can affect your new credit score.

What Is the Best Credit Card to Start With?

Tangerine Money-Back card takes the prize in this category. It offers 2% cashback on your purchases in up to three categories.

Plus, there is no annual fee. All you need is a minimum income of $12,000 per year to qualify.

What Is the Easiest Credit Card to Get Approved for in Canada?

There are several credit cards in Canada that offer instant approval. 'Instant approval' refers to a quick process of applying for a credit card and being quickly approved or rejected.

The following banks offer instant approval. We have listed these in no particular order:

  • Bank of Montreal (BMO)
  • Canadian Imperial Bank of Commerce (CIBC)
  • Maryland National Bank (MBNA)
  • National Bank
  • Royal Bank
  • Scotiabank
  • Tangerine
  • Toronto-Dominion Bank (TD)

If I Am Approved for One, Should I Apply For Another Credit Card?

As you'll learn in the next section, having multiple lines of credit is great for building your credit. But, you don't want to open up too many lines of credit at once.

If you are approved for a credit card, you'll want to wait a while before applying for another one. Otherwise, your credit score will lower. This is because applying for multiple lines of credit in a short period of time is a sign of financial distress.

So, we recommend waiting at least six months in between credit applications. We also recommend waiting this amount of time in between opening any lines of credit.

How to Build Your Credit Score As a Newcomer

There are five main ways that you can build your credit score in Canada:

  1. Pay your bills on time every time
  2. Pay your bills in full when you can
  3. Get a credit card so that you can build your credit history
  4. Don't spend more than your credit line
  5. Read your monthly statements and report any incorrect history

What Is the Fastest Way to Build Credit With No History?

If you have no credit history in Canada, you need to start building credit as soon as possible. This means that you have to start opening lines of credit.

So, you should apply for a Canadian credit card as soon as possible. Then, you should use it consistently without overspending.

Paying your phone bills in full and on time also improves your credit score.

Home Ownership for Newcomers

If you're thinking about buying a home in Canada, there are a few steps that you should follow:

  1. Make sure that homeownership is right for you
  2. Budget how much you can spend on a home
  3. Research and tour communities to find the right place for you and your family
  4. Reach out for help from a real estate agent 
  5. Make an offer on the chosen property 
  6. Find a mortgage lender to help with funding
  7. Get your potential new home inspected
  8. Finalize the buying process
  9. Be financially responsible as you're taking care of and paying for your new home

How to Buy a House in Canada As a New Immigrant

The key to buying a house in Canada is getting the best mortgage rate. So, you should do your research to find the best deals for you.

Other than the financial difficulties, newcomers may also have problems with finding the right place to buy a home. So, you should make sure to do some touring in the areas you're looking at.

Plus, you should look up crime statistics, schools, and other factors important to you.

What Is the Average Income Newcomers Need to Buy a Home?

Before we jump into the numbers, we should explain that prices in cities are much higher than those in rural areas. But, cities have more job opportunities.

These are the required income parameters of residents in major Canadian cities:

  • Vancouver: $152,206
  • Calgary: $107,123
  • Edmonton: $72,812
  • Regina: $65,881
  • Saskatoon: $71,006
  • Winnipeg: $58,191
  • Ottawa: $74,216
  • Toronto: $128,746
  • Montreal: $78,473
  • Halifax: $56,929
  • St. John's: $54,717

As for rural residents, they make about $200-$300 less than their urban counterparts. And, their properties cost less. Overall, Canadian rural residents earn about $40,113 per year.

Filing Taxes for the First Time

Just like any other Canadian resident, you will need to file your taxes. However, you are only considered a newcomer for tax purposes during the first year you're filing. After that, you'll file just like everyone else.

Do New Immigrants Pay Taxes?

Even if you've only lived in Canada for part of the year, you need to file a tax return.

Even if you don't have any income for the year you're filing, you still have to file the paperwork.

How Do I File My First Canadian Tax Return?

When you're filing your first tax return, you'll want to use the tax package for the province or territory in which you're currently living. However, there're online platforms that can make filing your taxes a much easier process; TurboTax or SimpleTax are good options.

You'll also need identification information and the exact date that you entered the country.

For the amount of time that you didn't reside in Canada, you have to report your world income. This includes all of the income that you earned inside and outside of Canada during the given tax year.

Completing Your Newcomer Financial Checklist

Congratulations! Not only are you moving to Canada. You're also now prepared for all of the financial responsibilities that come with such a move.

That's why we're here. Our team here at Insurdinary can help guide you through the ups and the downs of your new financial life in Canada. Take a look at our blog for more financial resources. 

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