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Managing Money as a New Canadian

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Moving to a new country and becoming a new Canadian is incredibly intimidating. Not only do you have to know a whole new currency, you have to learn to manage it as well. This blog features a story from a new Canadian from India who breaks down what they learned by establishing their financial well-being in their brand new home. 

Humble Beginnings

On January 22, 2018, I landed in Regina as a new Canadian on a cold night with my husband and my 10-year old daughter. In 2019 alone, approximately 85,000 immigrants landed in Canada from India making it one of the main source countries for new immigrants to Canada. I am so excited to be one of them.

Our family of three came to Canada carrying around $30,000 CAD (~1.7M INR) of survival funds. We knew that if we weren’t careful, we could spend all of it in the first six months – especially if we did not secure a job so it was important to be cautious with our spending until we got our legs under us in our new country. We educated ourselves about spending money in Canada by not shying away from asking questions to colleagues, neighbours and fellow immigrants.

Little did we know, that $30,000 could quickly dwindle on things you didn’t even expect to purchase when adjusting to a different environment. For instance, the three of us had never purchased winter jackets before but it was an essential buy as we had moved midway through winter in Canada. We had a choice to make between thrifting or buying. “Frigid” would be an understatement when it comes to Saskatchewan winters so buying new jackets to last us for years was a reasonable choice.

We leased a condo apartment in the first week of us having landed in Canada. Putting cash down on a used van to ensure we were mobile and independent was also important to us. We shopped for kitchen supplies from the dollar store and our furniture shopping ended after buying a box spring and a few mattresses. We were ready to take on the world and build our new nest each day, piece by piece!

Budgeting

Finding a job as a new Canadian is hard. It took us five months to get stable jobs that covered our monthly expenses and allowed us to begin our savings again.

Being salaried employees in our previous jobs, my husband and I were well-versed in the principles of budgeting and saving for retirements and emergencies. Having a conversation about budgeting and setting strict spending rules was a great place to start. Our google spreadsheet had titles like groceries, gas, utilities and even alcohol & salon expenses. Every little detail mattered and was essential for us to plan better. We now use the Conexus Budget Calculator. This is a wonderful tool that allows you to get a clear picture of monthly expenses in percentages.

A perception survey conducted by Insightrix in 2020 stated that 62% of Saskatchewanians say money causes stress and 61% say their top financial concern is not having enough savings for emergencies. Being disciplined in saving money may seem like a hassle at the time, but it quickly transforms into hope, security and confidence as you know you are covered for emergencies and you can take comfort in the fact that you are actively contributing to your future (ie: down payment on a future home).  We have learnt over time that categorizing savings in different accounts and naming them after our goals/purposes (ie: “vacation”, “home expenses”, “miscellaneous”, “emergency”) is helpful for staying on track. Here’s a helpful tip: you can save emergency savings in a TFSA account as well as the interest earned on that account will not be taxed.

Building Our Credit

As a new Canadian, it’s important to start building your credit score as soon as possible. In most cases, the credit history you’ve built in your home country does not transfer into Canada and unless there is enough cash to pay up front for all purchases, a family will need to work towards building a decent credit score.

To get credit, you need history and to build history, you needs to get credit. This is a vicious circle!

We were lucky to get approved for basic credit cards with no annual fees under the newcomers’ program.  In cases when a financial institution does not have a program like this, you can opt for a secured credit card.

When building our credit score, doing these things helped build it up faster:

  • We ensured that we paid out the card fully every month before the due date
  • Avoided cash transactions
  • Used no more than 30% of our credit limits
  • Avoided unnecessary credit applications

Our First New Car

As we were taking baby steps towards settling here, we were yearning to buy a new car. Being avid road-trippers, getting rid of the van and buying an SUV was at the top of our list.

We thought a six-month credit history was enough and started car shopping around summer. However, we soon found out that six months was not going to cut it. After trying four different dealerships, 11 hits on our credit report and waiting for an additional three months, we managed to get a loan from Ford Credit after we accumulated nine months of credit history. We did manage to hit the road before fall with our first camping trip to Moose Mountain in our brand new black Lincoln MKX Reserve.

My experience of working in a credit union helped me understand the importance of saving and having a good credit score. However, a few things should be left to the experts. For instance, I wish we had met with an advisor for the car loan before venturing out on our own. The 11 hits on our credit report knocked our score down further and that cost us time to rebuild the credit.

Buying Our Home in Regina

Coming into a new country – you are faced with the decision: “Should I buy or rent?” Our decision depended solely on the fact that we needed stability, preferred paying a mortgage versus renting, and having a place we could call “our home”. A mortgage seemed like a better option and a better use of our savings. We used money saved from our survival funds and extra savings from our jobs for a down payment. Researching the importance of having a Registered Retirement Savings Plan (RRSP) was also crucial for us. We opened our RRSP account as soon as we started working and set up direct debit contributions into the RRSP account. RRSPs can help you save for retirement, save taxes and you can withdraw from an RRSP account for a down payment under the first time Home Buyer’s Plan. This withdrawal helped us with extra wriggle room for buying new furniture and paying lawyer fees. A first-time home buyer can withdraw up to $25,000 from their RRSP account without worrying about taxes as long as they pay back the withdrawn amount within 12 years. We managed to get keys to our new home in July 2019!

We Are Still Unfinished

Financial literacy is a critical life skill. I was lucky enough to learn a lot by working for a credit union and could pass it down to my husband. We often wonder how things would have shaped up differently if my career path took me to a different profession. We try to financially educate every new Canadian we come across and try to make the transition easy for them. Our friends believe we have a story with a happy ending. We believe that we are still learning the fine skills of being financially healthy and staying on track while continuing to do what we love – traveling, camping, and living each day as it comes!

If you are a new Canadian and are on your own journey, I wish you the best of luck. If you have any questions – don’t hesitate to reach out to a Conexus financial advisor who are here to help you out, every step of the way.

Top 5 Strategies to Pay Off Your Debt

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Believe me, I know – if you’re in debt, whether it’s big or little, getting started on paying it off can be overwhelming. Here are my top five strategies to get you started and moving in the right direction and tackle that debt. Find a strategy that works for you and stick with it!

1. Pay off your most expensive debt first

If you have one particular debt with a super high interest rate, try making that debt your priority. You’ll need to maintain minimum payments on your other debts, but really putting everything you can into your most expensive debt will help to make your overall future debt less. The power of compound interest means that this debt has the possibility to grow the fastest, so eliminating it first is a solid step in the right direction.

2. Pay off your smallest debt first

This is a strategy for when you really need a win to get you motivated. By maintaining minimum payments on all of your debts and focusing on the one that will be the fastest to pay off, you’ll quickly get a little victory to keep you moving forward with the rest of your debt repayment plan.

3. The cash diet

Especially if you can get yourself into trouble with a credit or even debit card, the cash diet is a strategy where your budget becomes absolute law. You plan your budget (give our budget calculator a try), then take out cash to see you through a set amount of time like a week or the whole month. Once the cash is gone, that’s the end of your spending. It’s helpful to break up the cash into your individual budgets for things like groceries, gas, or pet expenses.

4. Use a tool to track your spending

If you’re struggling to find the money to pay off your debt, knowing exactly where all of your money goes is an important first step on finding room in your budget. Use our spending analysis tool or there are lots of great free apps that you can hook up to your bank account and credit cards that will track and categorize every transaction. Maybe you’ll realize you’re spending $30 a month on subscriptions you don’t even use, or that your grocery budget is way more than you thought it was. Knowledge is power, and with detailed knowledge of your spending, you can build better habits and cut out excess. For recommendations on how much of your income should go to which areas of your life, check out our how much money should I spend blog.

5. Ask for help

The burden of debt is worse if you’re suffering in silence. Talking to your friends, family, partner, or trusted mental health professional about how you want to start tackling your debt can help to make the stress more manageable. You can also talk to a financial expert, like one at Conexus, on your best path forward, and they can even help you refine your game plan. You can also talk to your creditors. It’s worth a phone call to see if any of your creditors are able to lower your interest rates, especially if you’ve been keeping up with minimum payments.

Debt is personal, so any strategy for tackling it that will work for you is the right strategy!

What debt strategy have you found success with? Let’s talk about it in the comments.

A woman is making an online purchase and is holding her credit card in her hand and entering her credit card number

The Real Cost of Carrying a Balance on a Credit Card

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Do you know what it actually costs when you carry a balance on your credit card?
We’ve broken it down and even have a tool to figure out how long it might take you to pay off your balance.

Balance is a good thing… right?

Sometimes because of unexpected costs or not enough planning, you end up carrying a balance on your credit card. But what, exactly, does it cost when you don’t pay your credit cards in full each month?

Let’s start by defining a few important terms when it comes to credit:

Principal – The amount you originally borrowed. Yes, anything you spend on your credit card is borrowed money.

Interest – What your credit card charges you for the privilege of borrowing money. This is usually presented as an annual percentage rate.

Compound Interest – Interest that is added to your principal … which is then charged interest. Interest on your interest is how credit card debt can stack up so quickly.

Minimum Payment – The smallest amount of money you can pay in order to keep your credit card and not damage your credit score.

Credit Score – This is essentially a measure of how good you are at fulfilling your financial commitments. A good credit score can help you buy a house or a car, get a loan, start a business, or even get you better interest rates.

Interest grows your debt

Let’s use an example. Say you’ve got $1,000 on a credit card with a 19% interest rate. That’s not bad, right? $1,000 isn’t that much at all, and 19% is a pretty standard interest rate. So, let’s say you put $20 each month toward paying off that debt, which is an approximate minimum payment. Do you want to know how long it would take to pay that balance off? More than eight years! And what would it cost you? About $997, which is basically doubling your debt load! And that’s with only paying off your principal with no additional borrowing.

With compound interest, every dollar you leave on your credit card ends up costing you more and more. It’s a powerful thing that can be used to your advantage when it comes to saving, but that’s another blog post.

The example above is just that, an example, but you can use our repayment calculator to help you figure out exactly what your debt might cost you.

A credit card can be good

There’s an obvious solution here, right? Just don’t get a credit card!

Well … it’s not quite that simple. In order to build credit, you need to use credit. So, if you hope to own a home one day, or even get a car loan, you’ll have to work to build your credit. The best way to do this is to use your credit card and pay off the entire balance each month.

Some good tips on using credit with care are:

  • Keep your credit limit sensible
  • Use credit cards for recurring payments that are a regular part of your budget
  • Plan for larger purchases
  • Use credit cards to build good credit within your budget, not as a tool to spend more than you earn
  • If you can’t trust yourself with your cards, leave them at home

See how long it’ll take to pay off your credit card balance

Credit is an important part of your financial life, but carrying a balance, or not managing it well can lead to a struggle with debt. Try our repayment calculator and remember that debt is something that can happen to any of us, so never be embarrassed to talk about it.

Did you learn something about credit cards? Are there other questions you still have about them? Let’s talk about it in the comments.

Couple reviewing how debt stacks up against other Canadians

How Does Your Debt Stack Up?

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Let’s have a look at debt in Canada.
How much do people owe on average? How does it break down by age group?

Debt

Almost all of us have it, and most of us are worried about it. How does your debt compares with the rest of Canada and Saskatchewan?

What Canadians owe

Let’s start with the big picture. On average, Canadians carry about $22,000 in non-mortgage debt.

That’s everything like credit cards, lines of credit, loans, car payments, and student loans.  Now the bad news – that number spikes to nearly $24,500 in Saskatchewan. That’s like an entire part-time job’s yearly income worth of debt.

To put it another way, according to Statistics Canada, many Canadians owe $1.74 for every $1.00 of disposable income they have.

Canadians have a lot of debt.

Gen X are the most in debt

Good news for Millennials though, it’s Gen X that’s bearing the biggest debt load right now! People aged 35-54 on average have more than $10,000 of consumer debt alone, while those aged 18-34 have way less at about $5,600. People aged 55+ are sitting in the middle with an average consumer debt of around $9,000. And this is all just consumer debt, or the debt that comes from buying stuff, not investing in anything like a home or your education.

One of the major factors in Canadian’s debt is probably pretty familiar to you – income is staying the same or even going down, while costs of just about everything keep rising.

D*bt happens

Whether your debt is at, above, or even below some of these averages, the real takeaway here is that struggling to stay in the black is a Canadian experience. The first step in tackling your debt should be to talk about it. In fact, one of the main reasons that it’s believed Millennial consumer debt is as low as it is right now, is that that generation has been taught to be more debt averse than others to the point that many are delaying or even rejecting home ownership.

Keep an eye out for our upcoming blogs about the real cost of a credit card balance and our top tips for paying off debt.

So, how did you stack up? Does your debt load make you feel stressed, or are you feeling a little better knowing that so many other Canadians are struggling with debt too? Let’s talk about it in the comments.