Money smart: Developing financial literacy as a newcomer for future success

Credit to Author: Rita Simonetta| Date: Wed, 01 Feb 2023 09:44:02 +0000

Marcela Mendez

When Marcela Mendez arrived in Canada three years ago from Colombia, she had some savings to help her along. But she soon got a shock.

“All the money I had saved up was in pesos, so once it was converted to Canadian dollars, it was practically nothing,” she recalls.

“One of the most critical points – which has always been critical, but particularly more so now because of the rising cost of living – is the conversion of currency,” points out Samina Sami, CEO of COSTI Immigrant Services. It’s a challenge for new Canadians like Mendez, accustomed to dealing with a currency whose value is wholly different from what they are used to.

Deciding to make the journey to Canada takes courage, determination and a solid grasp of money management. It’s a fact that settlement agencies are keenly aware of. They offer several one-on-one and group orientation sessions to clients in areas including banking, taxes and budgeting.

Samina Sami

“Financial literacy is integrated in many of our programs,” says Sami. “It’s even more crucial now if families and individuals are not budgeting with the cost of living and with inflation in mind – or perhaps don’t know how to do it. We have to give them those tools so they can successfully settle in Canada.”

“It can be a rollercoaster,” Mendez notes, in reference to the many financial learning curves immigrants and refugees face.

Although moving to Toronto has had its share of challenges, the 38-year-old is eager to continue building her future here. A lover of the arts and writing, Mendez participated in the Toronto workshop of The Shoe Project, a collaborative effort where newcomer women, inspired by a pair of shoes, create and perform a story about their journey. Mendez enjoyed the experience so much that she remains involved with the organization and is now the local coordinator of the Brampton workshop. She also works as a full-time business administrator.

And just recently, she launched a freelance photography business, turning her hobby into a viable form of revenue.

“It was always my dream,” she says. “But I also needed a way to make extra income. It’s very challenging these days because life in Canada, especially in Toronto, is becoming more expensive.”

There are also a lot of taxes for newcomers to contend with, points out Margarita Cardona, the community settlement manager at HMC Connections, a nonprofit providing settlement services in the region of Halton in Ontario. “I always tell clients that what they see on the price sticker at the store is not the true price; in Ontario, 13 per cent HST is added.”

Margarita Cardona

It’s a lot to process for immigrants and refugees, especially considering there are exemptions to the HST in Ontario, including basic groceries, and some goods and services only have a five per cent federal tax. And sales taxes also vary across provinces and territories. Cardona says that’s why it’s crucial for newcomers to learn as much as they can about how sales taxes in Canada affect their expenses, which in turn will impact their ability to save.

Newcomers should also be aware that tax deductions take a bite out of earnings. It’s something Mendez discovered when she landed a job. Her initial excitement was tempered when she received her first paycheque. “I thought, ‘My God, what happened? Maybe they made a  mistake.’”

It’s a scenario Cardona has witnessed many times at HMC Connections. “Newcomers don’t realize there are deductions for income tax, as well as contributions to Canada’s Employment Insurance program (EI) and the Canada Pension Plan (CPP),” she says.

And while taxes are a fact of life newcomers have no control over, they can take control of their credit history. “Get a credit card, but use it wisely by keeping an eye on your expenses,” says Cardona. “Make sure you only use it for small purchases that you can pay off when you get your monthly statement – not for expensive items you can’t afford.”

All of this will go a long way to securing financial stability, she explains. “Because you’ll need a good credit score in order to make bigger and more expensive purchases down the road.”

Fazal Amiri, a native of Afghanistan who recently celebrated one year in Canada, is well versed in the importance of credit history. “A friend  of mine who came from Egypt didn’t realize how important it is to have good credit if you want to buy a car or get a mortgage. I told him what I learned.” It’s one of the many financial literacy topics the 39-year-old discovered through the Immigrant Services Society of BC (ISSofBC), which has been supporting newcomers building their lives in British Columbia for over 50 years.

Amiri and Mendez say that opening a bank account was one of the first things they did when they came to Canada. The good news is that all major Canadian banks offer various incentives for those making a new start, such as chequing accounts that waive monthly fees or don’t require minimum balance requirements, and some banks even offer a cash bonus for opening a chequing account.

A tool Amiri finds particularly useful is online banking. “It made it easier to keep track of everything,” he notes. “I also learned how to try to save money so I can put it toward my children’s future.”

Amiri is grateful to ISSofBC for the knowledge he’s gained, which makes it easier for him to navigate money management in Canada. And he’s paying it forward in his own way. He’s always been involved in the humanitarian sector – in Kabul, he served as Oxfam’s senior program manager. Now, in his adopted province of British Columbia, he continues helping others as a case management support specialist at an employment service agency.

Regardless of the hardships involved in making the transition as a newcomer, Amiri is committed to becoming financially resilient. “I try to work hard and manage my finances,” he says. “I have to keep moving forward.”

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