3 Steps to Financial Success as a Newcomer to Canada

New Beginnings Made Simpler with BMO. BMO is the first and oldest bank in Canada with over 200 years of experience and aims to boldly grow the good by helping you make real financial progress.

Moving to a new country can be overwhelming. It feels like everything is different—the culture, people, language, work environment, ways of living, and managing finances. 

You know it’s important to learn Canadian banking basics, but you don’t really know how or where to start. And sometimes you worry about making mistakes, not budgeting correctly, or being taken advantage of.

To grow and thrive in Canada, it’s important for newcomers to have the tools and resources available to achieve financial success. Understanding Canada’s financial system—including banking, credit, and debt—can make it easier to get a job, a car, a home, and more for the future you’re creating here.

In this article, we’ll discuss banking basics and tips to help you get started as a newcomer to Canada, including how to open a bank account, plan your budget effectively, and build a healthy credit history.

1. Opening a Bank Account in Canada as a New Immigrant

Opening a bank account in Canada is an essential step for newcomers. With a bank account, you can save your funds securely, pay bills online, and make everyday purchases without carrying cash. It simplifies transactions and provides convenient access to ATMs and banking services across the country.

Types of Accounts

There are two main types of banking accounts in Canada—chequing accounts and savings accounts. A chequing account is used for daily transactions. A savings account is used for saving your money while maintaining easy access to it. Savings accounts typically have higher interest rates, which means you earn interest from the deposit.

The BMO NewStart® Pre-Arrival Account Opening program enables applicants from 13 countries to open a bank account. There is the option of transferring up to $75,000 CAD into an account. Once you land, simply visit a branch to activate your account. If you have already arrived in Canada, you can apply for a bank account online or book an appointment to set up your bank account in person.

BMO helps make new beginnings simpler for newcomers by offering banking products and services, including access to credit with no credit history, performance chequing account with no monthly plan fees for one year, and unlimited Global Money Transfers with no fee* to help get you established in Canada. Learn more about BMO NewStart® Program.

2. Ways to Save and Budget Effectively as a Newcomer

• Master Budget Management

To stay on top of your finances, you’ll need to create and maintain a budget. This will help you establish a realistic spending plan for your life in Canada. 

When creating a budget, you can use a budgeting app or start by making a list of your income and expenses. Determine how much money you spend each month and compare it with how much you pay for bills during that same period. It is important to put your income, expenses, and debt down in writing to help you track your spending behaviour. 

Setting financial goals helps align your spending habits with your long-term objectives. When you have clear goals, it is easier to manage your cash flow and prevent you from spending on non-essential items.

• Build A Saving Habit

Saving is an important part of budgeting. Whether you’re looking to travel back home or save up funds for college, putting money aside each month helps you work towards those financial goals.

Every time you receive income, take a small percentage and put that money into a high-interest savings account. You can set up automatic deposit to your savings account every time you get paid. This way you won’t be tempted to spend the money and can let it grow over time.

With BMO, the BMO Savings Goals is a feature on the BMO Mobile Banking app that allows you to create your savings goals, check your progress and manage goals. Savings should also include an emergency fund. This is money you set aside to pay for unexpected expenses that are usually unforeseen and often urgent, like medical bills or car repairs. The fund should contain enough money to cover several months’ worth of living costs, depending on your situation.

• Improve Your Financial Literacy

There are many online resources that can help with managing your finances. Want to learn more about Canadian banking and financial benefits in Canada? BMO SmartProgress™ is a free online financial education tool that has been designed with bite-sized content, including videos and tools, to augment understanding of complex financial topics, such as budgeting and credit management, homeownership and investing in your future.

You’ll also find a variety of tools in our Budgeting for Newcomers program, sponsored by BMO, including educational blogs, webinars, and events focused on budgeting for newcomers. Credit Canada’s app Butterfly is specifically designed by newcomers, for newcomers to offer personalized insights into your income and expenses. 

3. How to Build a Healthy Credit History

Canada is a credit-based society. This means building your credit foundation is a critical first step in building your financial life here. With a solid credit score, it’s easier to get a car, a mortgage for your home or working towards your dreams.

A credit score is a number that represents how creditworthy you are. Banks check your credit score when deciding to lend you money for loans, mortgages, insurance, and credit cards. In Canada, your credit score is a number between 300 and 900, with 900 being the highest possible score. The higher your credit score, the more likely a bank is to lend you money—so, the higher the credit score, the better. Learn more about how you can build credit history in Canada. 

If you’re new to Canada, here’s where you can start to build credit responsibly: 

Apply for a Credit Card

Less is more when it comes to establishing credit history. You don’t have to apply for multiple credit cards to increase your score. In fact, that could have the opposite effect and decrease your score!

A credit card is a good option that can help you build your credit score. If you are not eligible for an unsecured credit card, you may be eligible for a secured credit card. How it works is you put down an initial deposit that determines the credit amount. The bank or lender then holds this money as collateral. Over time, this can help you establish a positive credit history and potentially increase your credit limit with better financial opportunities. With the BMO NewStart® Program, newcomers can get access to a no annual fee credit card with no credit history. Those who don’t qualify for the unsecured credit card will be eligible for the secured credit card, which still has all the features of the credit card. If you bank with BMO, you can use CreditView® to get no-fee, no-impact access to your credit score so you can start monitoring and building your credit today. 

Make Timely Bill Payments 

Making consistent on-time payments is one of the best things you can do to boost your credit score. Late payments have a negative impact on your credit history, so be sure to at least pay your monthly minimum payments on time, every time. Carrying debt is expensive, so you’ll want to prioritize paying off any existing debts.

Keep in mind that the amount you owe can have an impact on your credit history, so limiting your debt will make a big difference! Try to pay off your debts in full by putting more money towards the outstanding balances.

Conclusion

Responsible banking, good financial planning and strong financial literacy can help you make informed decisions about your finances and pave way to a successful life in Canada. BMO SmartProgress™ can help you get familiar with Canadian banking basics, like budgeting and credit management and savings for your future.