Saving money as a newcomer in a country can be challenging. Adapting to a new financial system, managing everyday expenses, and navigating an unfamiliar environment all add to the hassle. The best strategy for saving money in Canada as a newcomer is to save and invest. With this strategy, you build a strong financial foundation while heading toward long-term financial freedom.
Granted, staying on top of your finances might feel overwhelming at first, from high living costs to unforeseen expenses. However, with a few smart strategies and informed decisions, you can achieve your goals. We have discussed some practical tips that can help you save money and make the most of your new life in Canada.
Clever Ways to Save Money in Canada
1. Create a Budget
There is no healthy savings plan without a budget. A budget shows exactly how much money is coming in (e.g., salary, benefits) and going out (e.g., rent, groceries). It helps you take control of your finances, prioritise your needs, and avoid unnecessary spending which is the first step in saving.
A budget also helps you spot where you can cut back. It could be cancelling unused subscriptions or finding cheaper alternatives. These savings can be redirected toward financial goals like an emergency fund or investments.
Some helpful tips for creating a budget are:
- Calculate Income: Include all sources like salary, side hustles, or government benefits.
- List Expenses: Separate fixed (rent, insurance) and variable (groceries, entertainment) costs.
- Set Limits: Assign specific amounts to each category, prioritising essentials.
- Track and Adjust: Use apps like Mint, YNAB, or a spreadsheet to monitor spending and tweak as needed.
2. Choose Affordable Housing
One of the major reasons for huge expenses and debt in Canada is housing. If you are able to conquer the housing problem, saving money in Canada will be much more doable. Affordable housing allows you to keep your rent or mortgage payments low, which can make a big difference in your overall budget. The good thing is there are various housing options in Canada that you can choose from depending on your circumstances and preferences.
If you are unmarried and have family or friends who are willing to accommodate you, don’t be shy about taking the offer. This can save money as you search for affordable long-term housing. This buffer period allows you to explore the market without financial pressure.
3. Shop Smart for Groceries
Groceries are a daily need and so, they contribute largely to overall expenses and if not planned well can lead to overspending. Smart grocery shopping involves planning meals and creating a shopping list before heading to the store. This helps you stick to what you need and avoid spending on unnecessary items.
Taking advantage of weekly discounts and promotions is also how to save money in Canada on groceries. Similarly, grocery chains like Loblaws, Sobeys, and Metro offer loyalty programs where you can earn points on purchases. These points can be redeemed for discounts on future shopping trips.
4. Take Advantage of Free Services
Canada offers a range of free or low-cost resources specifically designed to support individuals as they settle into the country. These resources can be useful for anyone including those thinking of how to save money in Canada as an international student. For instance, one way of saving money in Canada as a student is to maximise free educational materials like books, language learning materials, online courses, and even technology like computers and Wi-Fi.
Canada also provides free healthcare services for its residents and free settlement services for newcomers. Aside from these essential resources, Canada also offers free entertainment and recreation. This includes public parks, beaches, hiking trails, community events, free concerts, festivals, and cultural events.
5. Open a Bank Account with No Fees
Standard banking accounts in Canada typically charge a monthly maintenance fee ranging from $5 to $30, depending on the account type. No-fee accounts eliminate this cost, saving you money every month.
Additionally, many no-fee accounts include unlimited or a specific number of free transactions, such as withdrawals, transfers, or debit card purchases. This reduces the risk of incurring extra charges for exceeding transaction limits.
Popular No-Fee Banking Options in Canada
Several Canadian banks and credit unions offer no-fee accounts, especially for newcomers:
- Tangerine: No monthly fees, free transactions, and unlimited Interac e-transfers.
- Simplii Financial: No monthly fees, unlimited transactions, and free e-transfers.
- Credit Unions: Many local credit unions have no-fee or low-fee options with community-focused perks.
- Newcomer Packages: Major banks like RBC, TD, Scotiabank, and CIBC often offer fee waivers for the first 6–12 months.
6. Learn About Tax Benefits
Canada’s tax system offers numerous deductions, credits, and benefits tailored for individuals, families, students, and low-income earners. These are easily overlooked opportunities for saving money in Canada If you do not know about these benefits, you could easily miss out on easy ways to put more money back into your pocket.
For instance, newcomers purchasing their first home in Canada can take advantage of tax benefits like the First-Time Home Buyers’ Amount, a non-refundable credit worth $750. Additionally, programs like the Home Buyers’ Plan allow you to withdraw up to $35,000 from a Registered Retirement Savings Plan (RRSP) tax-free to fund your purchase.
Moreover, understanding the tax system ensures you file accurately and on time, avoiding late penalties and interest.
7. Build an Emergency Fund
When emergencies arise, many people turn to credit cards, payday loans, or personal loans, which often have extremely high interest rates. An emergency fund provides immediate cash, eliminating the need to borrow at costly rates.
An emergency fund is different from your main savings. It is the money you use in times of unexpected situations so that you do not have to use your savings. In essence, knowing you have an emergency fund reduces anxiety and helps you stick to your savings and spending goals without overcompensating for unexpected costs. This disciplined approach avoids wasteful spending.
How to Build an Emergency Fund
- Set a Realistic Goal: Don’t over-stretch when saving money in Canada for emergency funds so that you can be consistent. Begin with a smaller target, and gradually increase it.
- Automate Savings: Set up automatic transfers from your primary account to a high-interest savings account to build your fund effortlessly.
- Prioritise Needs Over Wants: Cut back on non-essential expenses, like dining out or subscriptions, and divert that money to your fund.
- Use Windfalls Wisely: Allocate bonuses, tax refunds, or gifts directly to your emergency fund.
- Keep It Accessible but Separate: Store your funds in a separate account that’s easy to access in emergencies but not tied to your daily spending.
8. Avoid Unnecessary Subscriptions
Subscriptions often seem affordable individually, but their cumulative cost can strain your budget. Cancelling unused or rarely used services immediately lowers your monthly bills. Also, every dollar saved from cutting unnecessary subscriptions can be redirected to an emergency fund, investments, or paying off debts. This improves your financial stability in the long run.
Reviewing your subscriptions regularly helps you understand where your money is going and prompts you to cut out low-value services. This habit builds financial discipline and helps you prioritise spending.
Best Investment in Canada for Beginners
Although safe investments with high returns in Canada are a rare combination, as higher returns typically involve higher risks. Still, there are several relatively safe investment options to consider when saving money in Canada that can still provide decent returns.
High-Interest Savings Accounts (HISA)
A High-Interest Savings Account is a secure place to grow your money while keeping it easily accessible. These accounts are offered by banks and credit unions and pay higher interest rates than regular savings accounts. Your money is protected through deposit insurance, so there’s virtually no risk. While returns are modest, typically around 1.5% to 3%, HISAs are a great option for short-term savings or building an emergency fund.
Guaranteed Investment Certificates (GICs)
GICs are fixed-term investments where you deposit money with a bank or credit union for a set period (e.g., 1 to 5 years) and earn a guaranteed interest rate. They’re safe because your principal is insured and unaffected by market fluctuations. Interest rates can range from 3% to 5%, depending on the term. However, your money is locked in, so it’s best for goals where you don’t need immediate access to funds.
Exchange-Traded Funds (ETFs)
ETFs are collections of stocks or bonds that you can buy and sell on the stock market. They provide diversification (spreading your investment across multiple companies or sectors) and often have lower fees compared to mutual funds. While there’s some risk because their value depends on market performance, ETFs focused on stable industries or broad market indexes, like the S&P/TSX, can offer annual returns of 5% to 8% over the long term.
Tax-Free Savings Account (TFSA)
A TFSA isn’t an investment itself but a tax-sheltered account where you can hold investments like GICs, ETFs, or dividend stocks. Hence, a great account option for saving money in Canada. Any income or gains within a TFSA are tax-free, making it an ideal vehicle for growing your money without worrying about taxes. The safety of the investment depends on the type of asset you hold in the TFSA, but it’s an excellent tool to maximise returns.
Real Estate Investment Trusts (REITs)
REITs allow you to invest in real estate without buying property directly. These trusts own income-generating properties, such as apartment buildings or shopping malls, and pay dividends to investors. While returns depend on market conditions, REITs typically yield 4% to 6% annually and provide diversification to your investment portfolio. They are less risky than buying physical property but still carry moderate market-related risks.
Government Bonds
Government bonds are loans to the federal, provincial, or municipal government, considered one of the safest investments because they are backed by the government. They pay a fixed interest rate, usually lower than corporate bonds, with annual returns ranging from 1%-3%. Government bonds are ideal for risk-averse investors looking for stability and regular income. For example, Canada Savings Bonds were historically popular, though they are no longer issued, but alternatives like Canada Premium Bonds or treasury bills remain reliable options.
Conclusion
Saving money in Canada as a newcomer is essential for creating financial stability and reducing stress in your new environment. By implementing these helpful tips, such as budgeting effectively, exploring cost-saving opportunities, and being mindful of your spending habits, you can better manage your finances while enjoying what Canada has to offer. Small, consistent changes can lead to significant savings over time, allowing you to focus on building your future and settling comfortably into your new home.
