Today, let’s talk about the financial risks that newcomers to Canada face. You have just immigrated, and money is one of the most important things in life that, like it or not, affects our level of satisfaction and happiness.
It is very important to avoid making decisions that will cause you to spend too much or lose your money. Believe me, there are many such traps in Canada. Let’s talk about them so that you don’t fall into them. Because, honestly, I fell into some of them, even though I tried to figure them out in advance.
Banks
So, let’s get started. The first thing is banks. You know, banks often like to lure you in with incredible offers like $200 for opening an account, $500 for a friend, and so on. But in reality, the largest banks start charging you a monthly maintenance fee after a year. At the same time, you can find online banks such as EQ Bank, People Bank, and RS Financial that do not charge such fees, and they may be more effective for you.
It is extremely important to open an account because then you will be able to open a credit card, which will build your credit history. It is very important to open an account as early as possible because your credit rating also depends on when you open the account. Therefore, try to open an account with a large bank, but immediately ask about the fees that will apply not only now but also over time, and use online banks in principle.
Credit rating
The next point is a misunderstanding of credit ratings. I recommend installing several apps, in particular, Credit Karma and Borrowell — these are two apps that measure your credit rating at different credit organizations. There are only two such organizations, in my opinion. They are located in Canada. And, accordingly, they will even give you recommendations. In short, you need to open a credit card, or better yet, several.
You should not use more than 30% of your credit limit. Accordingly, try to increase your credit limits over time so that they are larger and what you use does not exceed 30%. And if you use more, replenish your card. And, accordingly, never miss loan payments.
Of course, I try not to pay interest, so I pay off the entire amount I used in the previous month the following month. It is important to keep track of this, to monitor it, because when you come to buy real estate, a car, and so on, this credit rating will be very important to you.
Credit cards
Next is a misunderstanding of credit cards, what fees you have for payments, and how to use these credit cards in general. Very often, you receive a statement, and the amount to be paid is unclear. There is no such word. It is usually called Balance Due. Therefore, when you spend something with a credit card, it is also a good way to understand how much you owe now or what credit limit you have used.
I often look at the available credit, and then the difference between the total and the available is how much I have to pay extra. But it is very important to understand your credit card statement for the month. How much has been spent, how much needs to be paid, if there is a regular payment, if you want to pay it off with interest. Because any mistake with a credit card payment leads to a deterioration in your credit history. This distances you from any coveted large purchases on credit or a mortgage.
Fraudsters
The next thing is financial fraud. It happens especially often to newcomers. Why? Because you just arrived in Canada and immediately bought a cell phone. It seems to me that these scammers somehow track new customers of telephone companies. And, accordingly, you immediately start receiving calls: “Hello, your package at Canada Post cannot be delivered, you have a super prize, and so on.”
In other words, theft often occurs here. Banks often compensate you if the theft was not intentional on your part, but nevertheless, you should not check the banking system. I have many friends who have lost money. They were told on Instagram that they were very beautiful, that their photo could be used, and that they would be sent a check. According to the check, it looks like the money has been credited. But in reality, they didn’t credit you, but asked you to return part of the amount. You returned it and lost your money. And the money never reached you. This is one of the schemes. There are actually many schemes. Be careful.
Car insurance
The next point is overpaying for car insurance upon arrival. If you don’t confirm your experience, or if you didn’t have a license in the first place and are just getting one, insurance can cost $300+ for new drivers. It all depends on your car and your experience.
It is very important to keep your old license and bring it with you if necessary. You can also bring some kind of reference stating that you have driving experience. Some provinces require this. Mine did not. Nevertheless, it is important to show your previous experience. This will minimize your insurance costs. My insurance, when my wife and I hadn’t yet joined, was $150-160.
Cost of living
The next point, and a very important one, is to break out of the vicious circle of home and work. Out of this circle with zero income. Because at first you start renting, which is extremely expensive. You start working somewhere, and your first job may not be that good. Accordingly, the cost of living, rent, and food may be more or less equal to your income. And I know several people who have lived here for two years and still live in this rhythm. And I understand that something is clearly wrong.
That is, you don’t necessarily have to keep this job, you need to look for something else, change. Figuratively speaking, don’t settle down until you are living in the black. Because until you are living in the black, you can’t save, you can’t plan any vacations, financial investments for retirement, work, and so on. After all, you didn’t come here just to work.