As newcomers we come with certain amount of money to help us settle down initially as the Canadian government requires us to provide proof of funds to show we have enough money to settle. Having money, earning it, saving it and making wise decisions about spending is the best strategy you can take as an immigrant for better financial planning. A good plan will help you get started with renting a place to live, opening an account, getting a debit card and a credit card, transferring money, paying rent, buying daily necessities and more.
Having the right attitude towards managing your money will make you confident and provide the security that you and your family need. The Immigrant Life brings you steps on adopting good financial planning:
- Assess your current situation. Taking stock of your current financial situation will help you see where your money is going. Check on your account and analyze if your expenses are justified.
- Track your money by writing down your expenditure. This will give you a clear picture of how you are spending. It will also help you breakdown the costs – from house rent, mortgage, car, insurance, grocery, internet services to entertainment such as that Netflix subscription. If doing it every day sounds tedious, do it once a week. But do it.
- Are you making enough? Take a look at your income and whether that is more than your expenses or not. Remember the simple rule: what you make should be more than what you spend. If you are not making enough, consider other sources – perhaps you can walk the neighbourhood dogs, or drive an Uber during peak hours when it pays more. If you are working long hours and feel that you deserve to be paid more, maybe it’s time for a negotiation. Do a market research and approach your employer to compensate you according to the market rates and the value that you have demonstrated on the job.
- Resist unnecessary expense. Cut off on getting that take-out and cook more meals at home. Whether it is buying all that home décor or apparel on sale, think before you make that purchase – do you really need it? Or is it just a desire to own it?
- Debt down. While swiping and tapping card is fun, this can pile up debts on your account at lightening speed. Start cutting down on those debts as soon as you can.
- Choose the right bank and accounting system. Understand what you are signing up for before you set up that account. While many bank accounts charge monthly fees, they are often waived if you keep a certain minimum daily balance in your account.
- Consider tax-free saving accounts. A good example is the Tax-Free Savings Account (TFSA) in which you can set money aside tax-free over the course of your lifetime. You don’t require an earning to open a TFSA which makes it a great way to start investing and take advantage of tax-free savings. Aside from TFSA, there are other options as registered retirement savings accounts (or RRSPs) and the registered education savings plan (or RESPs) which offer you chances of saving.
- Do not fall for fraudulent offerings. When you are new, you may get deluged in ads on social media (thanks algorithms!) that promise quick bucks. Be wary of these offerings which are usually scams.
- Work on your credit history. In Canada, your credit history contains facts gathered from financial institutions, retailers and lenders about how you have handled credit in the past. Most of this information stays in your credit file for seven years. Credit history dictates your credit score. Your credit score is a three-digit number that comes from the information in your credit report. It shows how well you manage credit and how risky it would be for a lender to lend you money. This will impact the availability and willingness of financial institutions to lend you money especially when it comes to large loans such as a mortgage. One of the best ways to improve your credit score is making on-time payments.
- Create an emergency fund. A small amount set aside regularly – out of every paycheck is possible and can be a big help in critical times. Being prepared for anything that life can throw your way with an emergency fund will be a huge relief to you when such a time comes. The expert advise on this is to have enough money that can see you and your family through six months.
- Look for saving tips. Most of the large payments you have to make offer you a discount if you make one-time payment annually or early payment that should save you the penalty or late payment fees.
Managing your finances does not need to be difficult but you do need to get started. Don’t allow your finances to get out of control before you start to manage them seriously. Small actions along the way can prevent a major financial disaster in the future.
As always, The Immigrant Life is here for you. Connect with us. Contribute to the immigrant community.