Tools and tips to help newcomers to Canada budget better in a time of higher cost of living
Published November 18, 2022.
Estimated reading time: 2.5 minutes
- Newcomers to Canada sometimes report having limited financial knowledge affecting their ability to make effective decisions about managing their money.
- As cost of living rises, more Canadians are thinking about success strategies to help their dollars go further.
- Building a budget where you closely monitor your income versus expenses while slowly contributing to an emergency fund can be very important to the financial health of new Canadians.
Canada now has the highest proportion of immigrants and refugees than it has ever had in its history.
A record 23 per cent.
This is only slated to increase in the years ahead with plans to bring in an additional 500,000 newcomers per year by 2025.
Many newcomers bring skills, knowledge and international education and experience to their new country but what often takes some adjusting is learning about Canada’s financial system. Especially, as cost of living rises.
Recent studies have shown many new Canadians self-report their financial knowledge level as limited when they arrive. The causes for this knowledge gap can include language barriers, difficulty accessing financial information, and even, a lack of trust in the financial system from your country of origin, which can make it difficult to learn about how to effectively manage your money in Canada.
As Canada experiences record inflation leading to increased cost of living, as well as increasing interest rates to borrow money, the Windmill Microlending blog connected with Carissa Lucreziano, Vice-President, Financial and Investment Advice at CIBC. Lucreziano indicates many Canadians are thinking about ways to be smarter with their money, right now.
CIBC’s Vice-President, Financial and Investment Advice, Carissa Lucreziano, says newcomers and Canadian-born individuals and families, alike, are spending more time thinking about their budgets as costs rise.
“A recent CIBC survey found over half of Canadians (56 per cent) are cutting back on discretionary spending and some are looking at couponing or switching from brand-name products in an effort to lessen the impact of rising costs for goods and services. Most people (81 per cent) are paying close attention to their finances so they can afford their needs before focusing on their wants,” Lucreziano says.
Did you know an affordable loan from Windmill Microlending can help you pay for the costs of training, accreditation, certification or professional development courses in Canada? Skilled immigrants and refugees can complete our two-minute eligibility quiz to find out if a Windmill microloan is right for them. No credit history required.
A Windmill partner, CIBC is a leading North American financial institution with 13 million personal banking, business, public sector and institutional clients. It offers a full range of advice, solutions and services through its leading digital banking network and locations across Canada.
Lucreziano suggests the following tips to help newcomers to Canada make their dollars go further and shares some CIBC tools and products to help with budgeting and financial planning.
Tip #1: Build a budget to avoid surprises
When moving to a new country, there’s a lot to navigate. One of the biggest challenges is figuring out how to adjust your finances, especially during a time of rising inflation and interest rates. The costs of essential expenses in Canada are higher due to inflation pressures on food, transportation and limited housing supply. It’s important that you build rising costs into your annual and monthly budgets.
Plan for expenses based on your needs. This will differ depending on how long ago you arrived in Canada. For those in their first year in Canada, this checklist can help. If you haven’t already, create your budget using the CIBC online budget calculator designed specifically for the needs of newcomers. Just enter your income and expenses and it will show you a big picture view of where you’re spending and saving each month.
Helpful CIBC tools:
LISTEN: CIBC’s Carissa Lucreziano shares the importance of tracking your expenses as cost of living rises and suggests a tool to help newcomers keep track of their budgets.
Tip #2: Reduce and monitor your expenses
Once you’ve created your budget, remember to keep an eye on your expenses. As prices rise, it’s important to review your budget and see if your spending is on track with your plan. If you find you’re spending more than you aimed to, reviewing your budget can help you find areas to cut back. CIBC also offers ways to pay no banking fees and safely make purchases:
- No fees on banking for two years & Visa debit access;
- No annual fee credit cards and loyalty rewards; and
- *Unsecured Personal Line of Credit (UPLC) to avoid high credit card interest charges
*If approved based on your Canadian credit history.
Effectively managing credit cards, lines of credit or microloans in Canada can help you build your credit history in your new country. You can also protect yourself from unexpected drains on savings by avoiding financial fraud and scams that can impact your budget.
Helpful CIBC tools:
CIBC Smart Account for Newcomers
Protect yourself from fraud and scams
Tip #3: Build an emergency fund and savings
Make regular savings a part of your monthly budget. Identify immediate, mid-term and long term financial goals. This might include:
- Building an emergency fund for unexpected immediate needs you didn't plan for with an eSavings account to set aside funds for quick access cash if there is a budget shortfall;
- Saving for your child’s education (if applicable). The Canadian government allows parents to set up a Registered Education Saving Plan (RESP) to shelter child education savings from taxes and will provide $500/year, up to a maximum of $7,200; and
- Saving for a home. First-time home buyers can set up a federal tax-free First Home Savings Account and can use a portion of the Registered Retirement Savings Plan (RRSP) for a down payment on a house, a CIBC advisor can help.
Helpful CIBC tools:
Looking for advice on how to develop an effective budget and financial plan? Explore the Financial Planning section within Windmill’s Skilled Immigrant Career Success Guide.