New to Canada? Three tips to help manage your finances
Credit to Author: Amit Sadhu| Date: Wed, 29 Jan 2020 20:48:13 +0000
At the beginning of the year, we often participate in a time-honoured custom of creating New Year’s resolutions. This typically involves individuals setting self-improvement goals to fulfill throughout the year. And finances, particularly money management and saving, commonly make an appearance on resolutions lists.
To start 2020 off on the right foot, below are some financial management tips specific for newcomers to Canada. These will not only help you start the year off right, but also kickstart how you manage your money in Canada.
Get to know the types of Canadian bank accounts
One of the differences you may notice first is the various types of accounts available to you. The two most common types are ‘chequing account’ and ‘savings account.’ You might decide to open a chequing account for your day-to-day transactions or deposit your pay cheques. A savings account is ideal for funds that you don’t need access to on a daily basis and may be the right option for setting money aside for things like home furnishings or education.
Research available investment plans
One is the Tax-Free Savings Account, or better known as a TFSA. A TFSA is an account where individuals can set money aside tax-free over the course of their lifetime; contributions to a TFSA are not deductible for income tax purposes but withdrawals from a TFSA are tax-free. You are not required to have earned an income to open up a TFSA so it’s a great way to start investing quickly and take advantage of tax-free savings.
Build your Canadian credit history
Once you open your first Canadian bank account, it’s important to start building credit history right away. Credit and credit history is needed in Canada for bigger purchases like a home or car, but may also be required for cell phone bills, rent and other monthly expenses.
One way to start building a credit history is by applying for a Canadian credit card and using it wisely. Having a Canadian credit card and making regular payments on it is the easiest way to establish a credit history and build a good credit score in Canada, which can help you qualify for other borrowing options and lower interest rates in the future.
A credit card provides other benefits as well:
• It’s a convenient way to shop and pay for services without carrying large amounts of cash.
• It’s often needed for certain purchases, such as setting up a contract for a mobile phone, renting a car or shopping online.
• Purchases made in Canada using a Canadian credit card are not subject to exchange rate costs.
Happy financial planning and all the best in 2020!
By: Amit Sadhu is the Vice President, Newcomer Segment, at RBC. Visit rbc.com/newcomers or visit a branch near you for help and advice to help you save more and settle in faster.