Basis financial steps for new immigrants in Canada

Basis financial steps for new immigrants in Canada

The following financial steps will help new immigrants build their financial future:

 Get a Bank Account

Set up a bank account right away, this helps build a credit history as well as save money. It’s a simple process; a bank representative can
help you. You will need two pieces of identification, one with a photo.

 

Take Health Insurance for the first 90 Days.

Since OHIP health coverage does not apply for the first 90 days, it could be a wise decision to tak a health and prescription drugs plan that could take care in case of a health issue during the first 90 days.

 

Buying a Life Insurance policy

It would be very important to consider a Universal Life or a Term Insurance for protecting your family.

 

Establish a Credit History

This can include:

  • Paying bills like rent, utilities, phone or cable on time.
  • Applying for small loans or credit cards and paying off the balances on time.

It can take 18 months to establish a good credit score. Your credit score is based on a number of things like:

  • Your record and length of employment
  • Owning or renting a home
  • Owning or leasing a car
  • Any debt you carry
  • Credit card and small loan repayment

Once credit history is established you can then consider major purchases like home ownership. The Canada Mortgage and Housing
Corporation provides information on home ownership. As well, the Ontario government website Settlement.Org offers newcomers personal finance guides.

 

Plan Your Financial Future

Once settled, your next step is to build your financial future through long-term savings plans like:

  • The Registered Education Savings Plan (RESP) is a savings account that helps you save for your child’s university or college education. There is a lifetime maximum of $50,000 per child. The Federal government tops up 20% of your annual contribution, with a maximum grant of $500 per year and a lifetime grant limit of $7,200. Contributions are not tax-deductible.

 

  •  The Registered Retirement Savings Plan (RRSP) is a savings account for retirement. Contributions reduce your annual income tax. Your contribution limit is 18% of the previous year’s earnings to a maximum of $22,450 for 2011. Income earned remains tax-free in the plan but is subject to tax when withdrawn. However, there is the assumption that when you do withdraw you will be in a lower tax bracket, and thus will save on the amount of tax paid.

 

  • The Tax-Free Savings Account (TFSA) supplements RRSPs. It is another way to shelter part of your investment earnings from income tax as there is no tax payable on capital gains. The maximum yearly contribution is $5000. It is not tax-deductible and withdrawals are not subject to income tax.

 

 

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