Managing finances is an important task for people settling in a new country. In Canada, settlement workers can offer comprehensive guidance on financial matters. This includes understanding basic budgeting and savings, as well as the importance of credit scores.

Noemi Garcia, a program manager at North York Community House in Toronto, Ontario, emphasizes the significance of budgeting and being able to effectively handle your finances (Battiston, 2023). In her role, Garcia manages the financial empowerment and mobile settlement programs, where she collaboratively oversees a team of 37 settlement workers. These workers travel in the community, offering assistance with various financial tasks, including debt management, budgeting, and income tax filing.

According to Garcia, budgeting serves as a tool for individuals to plan and gain a clear understanding of their financial situation (Battiston, 2023). By carefully assessing their income and expenditures, newcomers to Canada can find out what their financial situation is really like.

Garcia says that through budget creation, “you realize what you have been missing” (Battiston, 2023). This not only helps new immigrants navigate the Canadian economy more effectively, but also reveals strategies for optimizing savings and making mindful financial choices. In addition, it can make the job search a little easier, opening doors to broader opportunities. Garcia goes on to say that budgeting is not a one-size-fits-all solution; what proves effective for one person may not necessarily help another person get ahead (Battiston, 2023).

In Canada, a good credit rating is very important because it shows financial trustworthiness. This is important for everyone. A good credit rating helps in many ways. It makes renting a house easier because landlords are more willing to trust you. It also helps with getting personal loans and lines of credit. Banks and lenders use your credit rating to help decide whether to grant you a loan. This includes loans for a car, a house, or starting a business. Settlement workers can provide immigrants and refugees with key strategies for building a positive credit history, including responsible use of credit cards and how to pay bills on time. For immigrants, building a good credit rating is especially important. Having a credit history in Canada makes it easier to get loans or credit cards, and shows that they can manage money well. This helps with the settlement process and building a new life in Canada.

Advice for a Good Credit Rating

Here are five pieces of advice that settlement workers can pass on to immigrants in Canada to establish and build a good credit rating:

1. New immigrants to Canada might find getting a standard credit card challenging. They should begin with a secured credit card, which can be obtained from any Canadian bank. These cards require the cardholder to put up some money as collateral. Secured credit cards are easier to obtain than a standard credit card. Newcomers should use it carefully and ensure that they pay off the bills on time to start building their credit history.
2. Bills should always be paid on time. This includes credit card bills and other recurring payments like rent and utilities. Late payments can significantly harm a person’s credit rating. Consistently making on-time payments demonstrates financial reliability and helps build a good credit score.
3. It is important for everyone, not just newcomers, to manage their credit card spending. They should aim to use only a small portion of their available credit limit. High balances can be seen as a sign of financial stress; on the other hand, lower balances indicate good credit management and positively influences a person’s credit score.
4. Each time a person applies for a credit card, line of credit, or a loan, it may affect their credit score. Submitting several applications within a short period can be seen as a sign of financial instability. Individuals should plan carefully when applying for credit.
5. In Canada, there are two major credit bureaus that produce free credit reports: Equifax and TransUnion. Anyone can request a free copy of their credit report every year. Reviewing their credit report helps individuals understand their financial standing and identify any errors. Any errors should be reported to the credit bureau immediately. By regularly monitoring their credit report, newcomers can also track their progress in building a good credit score.

Advice on the Canadian Tax System and Savings

Settlement workers can also help newcomers understand the Canadian tax system. They assist newcomers with their applications for various provincial benefits including health care and social welfare. Specialized workshops are offered at settlement agencies to inform newcomers about financial matters, such as buying a home or planning for retirement.

According to Garcia, newcomers, who may not have recent work experience, might be unaware that filing taxes is a prerequisite for accessing government benefits (Battiston, 2023). The Financial Empowerment for Newcomers program, along with other services provided by North York Community House, are designed to assist newcomers in gaining knowledge about various aspects of financial planning. “We offer general information, allowing individuals to make their own decisions,” Garcia explains. The Canadian government provides access to organizations dedicated to enhancing Canadian financial literacy. Settlement workers can guide newcomers to programs in their province.

For newcomers, learning how to file taxes not only helps them understand the difference between gross income and net income, but also provides the added benefit of accessing benefits they are entitled to.

Settlement workers can offer valuable advice to newcomers about long-term savings options like the Registered Education Savings Plan (RESP), which can be an effective way to provide educational funding for their children, and the Tax-Free Savings Account (TFSA).

An RESP is a special savings account that parents or guardians can set up to save money for their children’s education. The government also helps by giving grants to increase savings. When it is time for the child to go to college or university, there will be more money available to help cover the costs.

A TFSA allows individuals to earn tax-free investment income and provides flexibility to withdraw funds at any time without paying any taxes. There is a limit to the amount individuals can deposit each year, so settlement workers should advise newcomers to consult with their bank.

In summary, managing finances is essential for newcomers in Canada. Settlement workers guide newcomers on building a good credit rating, understanding the Canadian tax system, and exploring savings options such as RESPs and TFSAs. Through targeted advice and workshops, newcomers gain essential financial literacy skills, supporting their successful integration and stability in Canada.

Financial Literacy Programs

If immigrants are looking for financial literacy programs where they live, here are some programs they can explore:

Alberta: The Centre for Newcomers offers free financial coaching and financial literacy workshops.

British Columbia: Chartered Professional Accountants British Columbia has a free financial literacy program for residents of BC and Yukon.

Manitoba: The Government of Manitoba provides guides and information on consumer education for new immigrants. As well, Manitoba Start also offers settlement programs and information.

Newfoundland and Labrador: The Association for New Canadians NL provides settlement and orientation services, including financial literacy.

New Brunswick: ABC Life Literacy Canada offers the ABC Money Matters program to increase financial literacy for newcomers to New Brunswick. The program is available throughout Canada.

Nova Scotia: The YWCA Halifax offers a Financial Literacy for Newcomers (FLNP) program, that includes guidance on budgeting, savings, taxes, and other relevant information.

Nunavut: ABC Life Literacy Canada’s Money Matters program is offered in the territory.

Northwest Territories: The Welcome to the NWT guide for newcomers provides information regarding financial matters in the territory. Newcomers are also encouraged to contact the Financial Consumer Agency of Canada for assistance and more information.

Ontario: Prosper Canada provides financial empowerment services, including financial literacy and coaching, to vulnerable communities throughout Ontario and in all of Canada.

Prince Edward Island: The Immigrant & Refugee Services Association Prince Edward Island offers resources for financial literacy.

Quebec: The ABC Money Matters program is available in Quebec and aims to increase financial literacy and education among newcomers.

Saskatchewan: The Financial and Consumer Affairs Authority of Saskatchewan provides information on financial literacy for newcomers. Also, the Saskatchewan Literacy Network provides information and tools for financial literacy.

Yukon: Chartered Professional Accountants British Columbia has a free financial literacy program for residents of BC and Yukon.

A recommended strategy by researchers to enhance newcomers’ financial knowledge is to include specific financial training in LINC programs (Bhabra, 2023). Since many newcomers enrol in LINC courses offered by immigrant service organizations, these organizations often also deliver practical financial training, such as guidance on opening a bank account or applying for a credit card. Researchers recommend integrating a more specific program referred to as “GAP” (Goals-based Active Planning), which emphasizes long-term savings goals and contributes significantly to supporting newcomers. For additional details and the complete article, please refer to 23% and Counting, but Not ‘One Size Fits All’: Helping Canada’s Immigrants Strengthen Their Financial Knowledge.

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