Navigating Canada's financial landscape can be daunting and stressful for newcomers, and moving to a new country can take a serious toll on financial confidence. According to a recent survey by Interac Corp. (Interac), while 61% of newcomers felt pretty good about their finances when they first arrived, that number dropped to just 31% after dealing with the financial realities of settling in. Managing finances in a new country can lead to feelings of anxiety and being overwhelmed.
Recognizing these challenges, Interac collaborated with Conscious Economics on the Mindfulness & Money for Newcomers digital learning program. This program, created by Conscious Economics and presented by Interac, helps newcomers build financial confidence and integrates mindfulness techniques to reduce financial stress.
Complementing this, Credit Canada is also dedicated to supporting and educating newcomers through their transition, offering valuable financial literacy tools, including the Butterfly budgeting app. Together, these resources help ease the transition and promote a sense of financial health and well-being.
Below, we’ve outlined some tips for newcomers to Canada to manage finances while promoting mindfulness while they’re adjusting to their new life.
Understanding Canada’s Financial System
Credit scores and debt management practices can differ significantly between countries, making it important to understand the Canadian tax system to ensure compliance with local regulations. Building a strong credit history is crucial for financial stability and unlocking opportunities for future investments, such as purchasing a home or starting a business. Fortunately, there are comprehensive resources specifically designed for newcomers, offering valuable guidance and support as they settle into life in Canada.
Canadian Financial System Guide
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Building Credit
For many newcomers to Canada, the concept of a credit score might be completely unfamiliar, as it's not a universal financial measure across the globe.
In Canada, credit scores range from 300 to 900, with a score above 700 typically considered good. A strong credit score is built by consistently paying bills on time, keeping credit card balances low relative to their limits, and maintaining a low frequency of new credit applications.
Many believe debt is inherently negative and should be avoided at all costs. However, embracing responsible credit usage through the use of credit cards can be instrumental in building a positive credit history. This can pose a challenge initially as it contrasts with the belief ingrained in many about debt avoidance.
By carefully managing a credit card through timely payments and maintaining low balances, newcomers can establish a solid credit score, which is crucial for accessing various financial opportunities, such as loans or renting a property.
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Concept of Debt
Debt can be a sensitive topic for many, especially for newcomers who may have experienced financial instability in their home country. However, debt differs from country to country.
Your goals may require you to challenge your concept of debt. In Canada, there are different types of debts, including secured and unsecured debts. Secured debts are backed by an asset, such as a car or a house, while unsecured debts do not require collateral. It's important to carefully consider the implications of each type of debt before borrowing money.
Anxious about setting up a credit card? You can start by getting your feet wet rather than diving right into the deep end.
“And there are other ways to build credit without needing a credit card, such as making sure that you are on top of your monthly payments, especially if these bills are registered in your name. Your phone bill is an example. Your rent. Maybe your car payments. Any bill that is registered under your name, as long as you’re making these payments in a timely way, it definitely makes a big difference in how it shows up on your credit score.” -Aseel El-Baba, Financial Therapist and Co-Founder of Mindfulness and Money
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Housing and Transportation
Housing and transportation are two essential aspects of everyday life that newcomers need to consider when managing their finances in Canada. For many, the cost of living in Canada may be higher than what they were used to in their home country. It's essential to research and understand the average costs of rent, utilities, and transportation in different cities or regions to plan a realistic budget.
“In most cases, [a mortgage] is the highest and biggest amount of debt you’ll ever owe…For newcomers, it’s very important to understand what are your goals around housing. Is home ownership important to you? There are so many different belief systems around that.” -Aseel El-Baba, Financial Therapist and Co-Founder of Mindfulness and Money
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Understanding Canadian Taxes
Taxes in Canada can be complex, and it's essential to understand the different types of taxes that apply to a newcomer. These include income tax, sales tax (GST/HST), payroll taxes, and property taxes.
Learning about the Canadian tax system will not only help newcomers stay compliant with regulations but also ensure they take advantage of available deductions and credits. Online resources are available for learning about filing taxes as a newcomer.
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The Canadian Tax System
Adapting to the Canadian tax system requires both a practical understanding and an emotional acceptance of its intricacies. For many newcomers, it involves recalibrating one's approach to finances, as there may be more factors to consider than in their home countries.
While the complexity of taxes can seem overwhelming at first, it's important to recognize the long-term societal benefits that arise from these contributions. Your emotional journey may vary, as perceptions of taxes can differ significantly depending on your past experiences.
“And it’s hard for a lot of people who come from areas where there’s a lot of corruption or disbelief with governments and systems to actually let go of this money and trust that it’s going to show up in ways of services and other ways that it will come back to you.” -Aseel El-Baba, Financial Therapist and Co-Founder of Mindfulness and Money
Building trust in the system can take time, but understanding that taxes support educational, healthcare, and infrastructural advancements can help newcomers appreciate their role within Canadian society.
Fraud Prevention for Newcomers
Another significant stress can be the fear of being taken advantage of when you're new to a country. Here are the steps Interac advises on adopting and which are mentioned in the Mindfulness & Money program to reduce the risk of fraud:
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STOP: Take time before responding to unsolicited messages
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SCRUTINIZE: Ask yourself if the sender is attempting to prey on emotional vulnerability to a sense of urgency
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SPEAK UP: Report fraud attempts
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PRACTICE GOOD DIGITAL HYGIENE: Protect your personal data
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BLOCK SENDER: Shut out untrusted contacts.
Are you new to Canada? Learn how Interac can help make your life here more seamless.
Building Financial Confidence
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Setting Small, Measurable Goals
Achieving financial confidence begins with setting small, measurable goals. Start by outlining what you wish to accomplish in the short term—consider goals such as saving for a specific purchase or paying down a portion of existing debt within 3-month, 6-month, or 1-year time frames.
“Take a moment as a newcomer to reflect on what your goals are and that process and ensure that right off the bat, you’re building the right financial frameworks to support these long-term goals.” -Aseel El-Baba, Financial Therapist and Co-Founder of Mindfulness and Money
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Leveraging Interac Products for Secure Transactions
Interac provides Canadians with secure and efficient payment solutions, supporting peace of mind in financial transactions. Using Interac e-Transfer® to send and receive money is convenient and fast, with robust security features that safeguard against fraud.
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Staying on Track with Expenses and Creating a Realistic Budget
Maintaining a realistic budget is essential for effective expense management and financial confidence. Utilizing budgeting tools or apps like Butterfly can provide insights into spending patterns and ensure accountability. Reflecting regularly on your budget will help adjust it in response to life changes or financial goals, supporting sustained financial health.
Integrating Mindfulness into Money Management
Developing present-moment awareness is a cornerstone of effective money management. It involves paying attention to your financial situation without being overwhelmed by past mistakes or future worries. You can try:
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Breathing exercises and grounding techniques
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Non-judgmental observation
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Establish a daily mindfulness routine
“Maybe it’s particularly hard on you if you are potentially in, let’s say, a manager position back home, and here you’re having to start from maybe an entry-job level. There’s a lot of guilt and shame and anger and frustration and so many emotions that can come up as a result of that experience.
So that non-judgemental observation is an invitation to continuously go back into getting curious into what you’re noticing without judging it and attaching so much meaning to it.” -Aseel El-Baba, Financial Therapist and Co-Founder of Mindfulness and Money
Staying Connected and Supported
“Build a community. That aspect is so important. In our Mindfulness & Money membership, we believe that healing happens in communities. It’s very important as a newcomer to create this new support system around you and build your social capital.” -Aseel El-Baba, Financial Therapist and Co-Founder of Mindfulness and Money
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Joining Community Groups and Events
Participating in community groups and events can be a valuable resource for those looking to enhance their financial literacy and confidence. These groups provide a supportive environment where individuals can share their experiences, challenges, and successes in managing money.
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Accessing Conscious Economics’ Mindfulness & Money Resources
Conscious Economics and Interac offer a wealth of resources designed to integrate mindfulness with financial health. Their Mindfulness & Money resources provide tools and strategies to cultivate a thoughtful and balanced approach to finances.
These resources often include guides on mindfulness practices that promote calm and clarity, aiding in more deliberate and stress-free financial decision-making. By accessing these tools, individuals can learn to reduce financial anxiety and build healthier relationships with money, transforming the way they engage with their financial goals.
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Building a Support Network to Share Experiences and Learn from Others
Creating a robust support network is essential in navigating the often-complex landscape of personal finance. Engaging with family, friends, online forums, or colleagues who have financial experience can provide valuable insights and advice.
Financial Help for Newcomers
At Credit Canada, we can be a part of that support network. If you need help building your credit or managing debt, Credit Canada's counsellors are here to help you. Contact us today to get started.
