Canada is well known for its welcoming environment and opportunities for growth. You may be relocating for a new cultural experience, a higher standard of living, or better job prospects. Whatever the reason, your financial well-being is pivotal to your success in Canada.
Navigating the Canadian financial landscape can be tough without the right information. In this article, we’ll discuss the common financial mistakes newcomers should avoid in Canada.
Not Planning Your Budget
Budgeting is the first rule to financial success, whether you’re immigrating to Canada or anywhere. Even so, over 52% of Canadians lack a financial plan, according to a survey by Sun Life. Not having a budget can lead to unexpected financial setbacks, especially when settling into a new country.
Before you arrive in Canada, create a budget that outlines the following:
your fixed costs (i.e. expenses you must pay regularly)
financial goals (e.g. Buying a home, education, starting a business)
anticipated expenses (e.g. groceries, household items, fun and entertainment)
Unanticipated expenses (a “rainy day” fund)
Regularly track your spending habits and adjust them to ensure your financial goals remain achievable.
After you establish your budget, be sure to review it every six months to align your goals with your new situation. For example, if you start making more money, you may wish to redistribute your earnings to meet new goals.
Overlooking the Importance of Building Your Credit Score
A good credit history is crucial in Canada, as it affects your access to financial services and interest rates. Lacking a credit history or having a poor one can be a barrier when applying for loans, insurance, or even cell phone plans.
One way to start building your credit history in Canada is with a credit card. Apply for credit cards that are designed for newcomers, such as those offered by Scotiabank. Regularly paying off your credit card will gradually build a healthy credit score.
Not Maintaining a Good Credit History
Building credit is just the first step. After that, the trick is to maintain it. Your credit score may take a hit if you are late on bills like utilities, rent, or car payments.
It helps if your bills get paid without you thinking about it. Consider setting up pre-authorized payments through your bank. Some Canadian banks, such as Scotiabank, allow you to set up electronic bill payments so that you never miss a payment.
Consistently on-time payments can indicate you’re a low-risk borrower. This can lead to better financial opportunities.
Not Reading Terms and Conditions
Always read and understand the terms and conditions of contracts like cell phones, insurance, banking products, or the lease agreement with your landlord. Failure to adhere to these terms may result in unforeseen penalties and expenses. Take your time to make informed decisions and avoid being rushed or pressured into agreements.
Avoid Credit Card Debt
While credit cards can be useful for building credit, they can become problematic if misused. Accumulating high levels of debt due to overspending can undermine your financial goals. To avoid this, pay off your credit card balance in full each month and avoid late payments. Also, limit yourself to one or two cards for essential expenses only.
Failure to File Taxes
Filing taxes is mandatory in Canada, and it’s essential to have a Social Insurance Number (SIN) for this purpose. Failing to file taxes can lead to missed government benefits and potential fines or interest charges.
Not Budgeting Properly for Your Move
Moving costs money. International moves can be particularly costly. You will incur many expenses, including shipping, insurance, duty, taxes, and visa fees. You need to budget well for these costs. Make sure your budget calculations are accurate to ensure you start your Canadian journey on the right financial footing.
Not Asking Questions
You may not even know what you don’t know. So, don’t hesitate to seek professional advice. Canadian banks like Scotiabank offer comprehensive financial planning services and multilingual support. Their advisors can help you understand your financial options, create a personalized budget, and guide you towards financial success. Book an appointment with a Scotiabank advisor.
Lastly, planning your financial journey in Canada should begin before you arrive. Early financial planning and learning about your banking options will set you up for success. While adapting to a new country may be challenging, starting right can make the transition smoother and help you achieve your goals. Click here to learn more.
Reach out to experts like those at Scotiabank for guidance, and remember that with proper planning, you can thrive in your new Canadian home.
