How to Manage Your Personal Finances When You’re New to Canada

For newcomers, carefully managing your finances is vital especially if you have not yet landed your ideal job. Settlement agencies suggest it can take up to six months to land a job that matches your skills and experiences. In the meantime, carefully managing your budget can reduce stress and financial pressure. Managing your finances will also help you build your Canadian credit history and influence your credit score.

Here, we’ll explore how to create a budget for some of your main expenses in Canada.

So where to start, which is essential to achieving future loans! You need to establish your Canadian credit history because it will be important for many reasons including buying your first home.

An important guiding principle is not how much you earn, but how much you spend. Many Canadians carry too much debt, trying to “keep up with the neighbours”, in other words, buying everything from cars to electronics, even if they can’t afford it. Overspending can catch you in a trap that you want to avoid.

Create a Budget to Manage Your Personal Finances

To manage your personal finances, start by preparing a budget with basic expenses like rent and utilities in mind. The cost of living in Canadian cities can vary. Large cities like Toronto and Vancouver are sought-after because they offer the most job opportunities, however, they are also more expensive.

Here are some of the basic expenses to consider when creating your budget:

Rent Payments

Housing costs will be the largest monthly expense. Newcomers often rent an apartment when they first arrive in Canada and prices vary depending on the city. Typically, prices for a one-bedroom apartment can range from $700 to $2,500 per month depending on the city.

Before you rent an apartment, visit the building to ensure it’s the right place for you. Determine if it meets your needs and is close to shops, work, and public transit.

Rentals for Newcomers site is a practical and easy-to-navigate site that can help you find housing that meets your unique needs! You can even determine the average costs of rentals in cities across Canada. This is helpful since rental prices change often. You’ll also find helpful articles to help you with your housing search.

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Utility Bills

You will need to budget for the cost of utilities such as electricity (hydro), heating, telephone, cable, and internet. Some apartments include heating and hydro costs in the rent. If you have to pay for electricity, you can ask the landlord what you expect to pay every month. But, your bill will also depend on usage and time of day.

For utilities like internet, cable, and telephone, the best option is to shop for bundles (combined service plans) from different telecom providers in your area. A bundle can cost anywhere between $100 – $150 per month. Or, check out streaming services that are less expensive than cable television.

Cell phone plans range from $15 per month to more than $150, depending on the number of free minutes and text messages and the data usage limits. Voicemail activation usually costs extra. You can start with a basic plan and upgrade according to your needs.

While not a bill per se, the cost of doing laundry will be similar from one month to the next. Apartment buildings come with laundry rooms with coin or card-operated washing machines. A washing cycle costs between $2.25 and $3.50 depending on the length, and a dryer cycle is similar.

Insurance

Even if you are renting, it’s a good idea to purchase renter’s insurance to protect you against damage and theft. The insurance can cost up to a few hundred dollars a year.

Depending on your province, you may also have to pay health insurance premiums, which vary by province and according to the size of your family. You will also need to factor in the premiums for any private health insurance you may buy.

Public Transit

Public transit is probably the most affordable means of travel. All cities offer affordable travel options such as buses, trains, subways, light-rail trains, and streetcars. A monthly transit pass can cost anywhere between $70 to more than $150 depending on the city and the number of travel routes. In large cities, such as Toronto, the public transit system covers the Greater Toronto Area, and you can easily transfer from one mode of transit to another.

To use public transit, you can purchase individual tickets starting at $3.50, but you can use a transfer at the start of your destination to transfer to different transit modes. In other words, you only have to pay once at the start of your destination. You can also buy transit passes that allow unlimited transit use for a period. Some cities offer an electric fare payment system that allows you to load money onto a card to make travelling easier and at a discounted fare.

You can find specific fare information about public transit in your city by visiting the website of your city government, or the public transit system.

Food and Groceries

The cost of your food bill will depend largely on your diet, personal standards, and where you live. The stores and supermarkets in popular posh areas are more expensive and will offer more high-quality gourmet and organic products, while cheaper areas will have more low-cost options. Food can set you back anywhere from $100 per week for a single person to several hundred. Cooking at home and planning your meals will balance cost and nutrition.

Personal care items and other supplies can start at $2 at dollar stores, but you may have to compromise on quality. Supermarkets have store brands that are usually cheaper than name brands and, in many cases, of comparable quality.

Clothing

Again, your personal preferences will determine your clothing budget. You should bring quality items that will last you because clothes shopping is best kept until you find employment. You can pay anywhere from a few dollars for clothing at a cheap retailer or a thrift (second-hand) store to hundreds and even thousands at high-end designer stores.

Entertainment

Movie tickets can cost $10 to $15 depending on the movie and the time of day. Most theatre tickets usually start at $20, and concerts of popular performers can cost well over $100. You can take advantage of local libraries to borrow DVDs and look for community theatres with free performances or performances by donation. It’s important to budget for entertainment, but this may be a personal finance area that you can cut back on if necessary.

Other Personal Finance Expenses

Big cities offer great variety and cultural cuisine, so you may want to treat yourself and your family to occasional restaurant outings. The costs can be anywhere from $10 per person at fast-food restaurants, to more than $50 per person at an average restaurant. People usually tip between 15 – 20% of the bill when eating at a restaurant.

Staying fit and healthy should always be a priority. Some rental buildings come with gyms and the price may be very low or included in the rent. If you plan to join a gym, always read the fine print. The monthly cost is usually $60 to $100, but most gyms charge introductory fees and substantial cancellation fees.

Personal care costs also cover the range from basic to luxury. Expect to pay at least $25 for a simple haircut (plus tip) and anywhere from $50 to $70 for a manicure.

If you’ve recently arrived in Canada, managing your personal finances carefully will help you reduce financial stress until you find your first job. And, the strong personal finance habits you follow during your first year in Canada will help you to achieve many of your long-term financial goals.

WRITTEN BY

Corinna Frattini

Senior Editor, Prepare for Canada

Corinna Frattini is the Senior Editor and Content Director for Prepare for Canada. She contributes articles to help newcomers achieve their goals in key areas related to living, working, and settling in Canada. With an extensive background in human resources and leadership development, her articles focus on what Canadian employers seek and how newcomers can continue their careers in Canada.

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