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Cost-saving ideas can be especially helpful for newcomers because saving money in Canada can be quite a challenge. The financial choices you make within your first year can impact how you live in Canada for the next few years. This is why it’s important to make good decisions now, so you can benefit in the years to come.
Furnished homes can be very helpful because they save a lot of time, money, and effort. You also won’t have to worry about how you are going to move the furniture if you are planning to move somewhere else in the future.
You will likely move somewhere else and it is a good idea to find a home on rent that is just enough to meet your needs. Anything after that will cost you more money than you need to pay.
Rentals for Newcomers is a great place to search for housing in Canada. With this practical and easy-to-navigate site, you can find the average cost of rentals right across Canada and search for housing according to your price range.
Living close to amenities is a great comfort and it is also an excellent cost-saving idea. If you usually check your expenses at the end of the month, you probably noticed that gas takes up a big chunk of the expenses.
Living near schools, grocery stores, and places you would visit often means that you would usually walk there, saving you a lot of gas.
You should also try to find a home that is near to your workplace because driving 20 km to your job and then driving 20 km back home can take a lot of time, and cost you more for gas.
No matter which province or territory you live in, there will be local organizations that help newcomers by providing them with basic furniture at a low cost or sometimes even no cost. One organization that does this is the Furniture Bank though you will have to pay a small fee to get the furniture delivered to your house.
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REGISTER FOR THE WEBINARKijiji and Facebook Marketplace are online sites where people can buy and sell items locally. Here is how they work: you go to the website to search for the item want to buy and contact the seller. Then if you are satisfied with the item, you can set up a time to meet and check out the item.
Some people are even willing to deliver for free or for a small cost. A lot of the people selling furniture on Kijiji or Facebook Marketplace are moving or trying to clear out everything from their house, so the furniture is usually in very good condition.
If you don’t want to buy used furniture, there are also some good options to buy new furniture. Ikea is the world’s biggest furniture retailer and for good reason. Not only is Ikea furniture affordable, but it is also of very good quality. What you may not like about it is that you have to assemble the furniture yourself at home.
Another great cost-saving idea is buying out of season. You can buy brand-new clothes for up to 80% off from clearance sales! Clothing stores put out-of-season clothes (and other items) on sale with huge discounts. You could save a lot of money just by buying clothes you will need in the future but don’t need right now. An example is buying snowshoes after the snow melts, and buying shorts when it starts to snow.
If you missed the clearance season or need clothes immediately, it might be worth visiting stores like Winners or Marshalls. These stores sell branded clothes for a lot lower prices than what they would normally sell for. They also have a wide variety of clothes, ranging from activewear to jewelry.
Buying used clothes is another way to save money. You can find cheap used clothes that are in really good condition. The owner usually sells the clothes because they have been out of use so you will get them at a good price.
The best way to go from one place to another is to walk or cycle. Not only does it save you money but it is also a very good way to keep yourself physically and mentally healthy. I am not saying you should walk or cycle 20 km, but if it is as little as 2-3 km, cycling there would be the best option. If your destination is only a kilometre away, then you should consider walking as well.
If you often have to go farther than you can walk or cycle, you might want to consider using public transport. There are many reasons to choose public transport over the car. You need to pay for car insurance, maintenance, and gas. Not to mention the cost of buying the car itself. Having a public transport pass costs around $150 a month. That is a very good price compared to owning a car.
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If public transport or cycling does not work for you or it isn’t convenient, you need a car. But where should you buy it from and how much should you pay? If you only need a small car to run your daily errands, you can usually find a used car for under $5000, depending on where you live.
One thing to keep in mind before buying the car is its fuel economy. This means how much gas it consumes per 100 km. If it is anywhere from 8 l/ 100 km and below, the fuel economy is pretty good, saving you a lot of money. Some good websites to buy used cars are Autotrader and Kijiji Autos.
Almost every grocery store in Canada offers weekly flyers that give discounts on certain items. Some of these grocery stores will require you to sign up for their weekly flyers to access the discounts but most will not.
Save.ca is a website where you can access almost all flyers from stores all over Canada. In my first year, I used save.ca regularly and it saved me a lot of money.
Now that I have told you how you can save money in your grocery store, I have some suggestions on where you can get your groceries. Walmart is a chain of grocery stores that has everything from clothes to food to utensils. If there is a Walmart location near your home, it’s a great store to get almost anything at a good price.
If your local Walmart is too far, then you should look for NOFRILLS. NOFRILLS is a Canadian chain of grocery stores owned by Loblaws that offers a wide variety of foods. Unlike most grocery stores, NOFRILLS is limited to only food and not things like stationery or clothes. However, it is less expensive than most other big grocery stores so, it is a good idea to know where your local NOFRILLS is located.
Dollarama is another good store but it doesn’t fall under the category of grocery stores. Yes, it does have some food like candy and canned foods, but it is better known for selling inexpensive items (all of its items are under $4). You can find things like stationery, canned foods, working tools, and kitchen utensils all at good prices.
It might be tempting to stop by a restaurant and pick up a burger but it may not be a good choice, both financially and healthwise. The better cost-saving idea would be to cook your food. If you have a burger craving, you can get the ingredients and cook the burger yourself. It will cost you a lot less as compared to the ones in restaurants.
If you do want to go to restaurants once in a while, you should be on the lookout for coupons. Coupons can give you lots of good deals but they are only eligible for a certain period. This is why it is a good idea to sign up for websites like Honey. Honey is a chrome extension (on laptops/ Chromebooks) and app (on mobile) that finds and applies coupon codes so you can save money on different things you order online.
If you go to the restaurant in person, then you won’t be able to use Honey as it only works when you order food online. Honey will also save you on other products you purchase online like electronics, as it usually works on most things you will order online.
Food Bank is a non-profit, national charity that helps Canadians by distributing food to those who need it. If you are a newcomer and are having difficulty finding a job, Food Bank is a very good option to get by your first year. Here is how the Food Bank works: People donate food or money to the Food Bank. The Food Bank then buys food and gives it out to the people that need it.
Another really good cost-saving idea is to divide your paycheck. There is no specific template because every family spends their money differently but no matter what your pay is, dividing your paycheck will save you a lot of money. Build a budget to manage your finances for fixed items like rent and insurance and, savings, and entertainment.
Once you have accounted for all your monthly expenses, stick to your budget and place the rest of the money into your savings account. This is one of the most foolproof cost-saving ideas and almost every successful family does this. You’ll be surprised how much money you save by organizing where and how you will spend it because it prevents you from spending too much.
Black Friday (the last Friday of November) and Boxing Day (December 26) are the two best times of the year to buy anything because there are huge sales everywhere. Black Friday marks the start of the holiday shopping season. Boxing Day sales are often the best time to buy things like electronics and furniture. Retailers offer deep discounts because they want to get rid of existing inventory.
You might be surprised how much money you could save by shopping in thrift stores rather than some fancy branded stores. When I say shop in thrift stores, I mainly mean for things like clothes.
You can find used clothes in thrift stores for up to 95% off their original price! A lot of people are concerned about the quality of the products they buy but this usually isn’t a problem because the thrift store sorts out all the good stuff and throws away the bad stuff before they stock the shelves.
Most people donate things to thrift stores because they don’t need them, not because they’re broken. That’s why you see so many clothes, as clothes get outgrown easily.
As I mentioned earlier, Kijiji and Facebook Marketplace are websites where you can buy and sell items locally. The reason I am mentioning them again is to tell you how useful they are and how you can even get free items from them.
Here in Mississauga where I live, I find Kijiji to be somewhat cheaper but that might differ depending on where in Canada you live. There is always a question about the quality of the item. You can always set up a time to meet with the seller (usually at their house) and check out the item. If you are satisfied, you can make the purchase. If not, don’t feel pressured to buy it and move on. I have got a lot of things from Kijiji and they are still going well for me.
There are always people that are moving and they often have garage sales or moving sales (whatever they want to call it). Because they won’t take everything with them, they sell items for a very low price. This leaves room for negotiation to further reduce the price.
The best way to find garage sales is to look for ads online. Some good websites to find garage sales are Gsalr and Kijiji. Another good way to find garage sales is to look for signs. I often take a walk around the neighbourhood and spot garage sale signs which are not listed online.
These cost-saving ideas can go a long way to help your budget and shape your financial future in Canada.
Retirement savings are essential for all Canadians to live comfortably after they retire. And the earlier you start saving, the better. For newcomers, understanding retirement savings options can be confusing. So in this article, I’ll demystify the Registered Retirements Savings Plan (RRSP). With a clear understanding, you can start saving as soon as possible to achieve your dreams and goals in Canada!
An RRSP is a tax-deferred retirement savings plan. This plan encourages you to save in your earning years so that you can have income in your retirement years.
The term “tax-deferred” means that when you open an RRSP and contribute to it, you can claim a deduction from your income. And any income earned in the RRSP remains tax-free unless you make a withdrawal from your RRSP. In other words, you defer or delay taxes until the time you make any withdrawal. Therefore, you can defer income taxes until later when you may be subject to lower taxes as your income goes down.
During the years when you earn a high income, you are subject to higher tax rates. So, contributing to an RRSP will help you lower your tax liability.
You are eligible to open an RRSP if you satisfy these conditions and you:
You can open multiple RRSP accounts. However, it will be easier to manage one RRSP account rather than tracking several accounts.
You can set up an RRSP through a:
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Computing the maximum RRSP contribution for the current year involves four steps.
STEP ONE:
Calculate 18% of the income you earned in the previous tax year. Add the following income to determine your earned income:
Less: Spousal support payments made.
No other income or capital gains will be considered as earned income for an RRSP.
Now multiply your earned income by 18%.
Visit www.canada.ca to find out the contribution limit for the current year.
In 2024, the website shows that the annual RRSP contribution limit is $30,780 (for tax year 2023).
Compare 18% of your earned income for the previous tax year as computed in step one and the annual contribution limit determined in step two.
Take the lesser of these two amounts.
To the lesser amount that you determined in step three, add unused RRSP contribution room from the previous years that were carried forward to the current year.
Now, subtract the:
Now, you have arrived at your maximum RRSP contribution for the current year. The maximum RRSP contribution is also known as:
If you participate in a registered pension plan or a deferred profit-sharing plan, you earn pension benefits. This is the amount of PA.
In simple terms, PSPA is the amount of extra pension credits you get when either there is:
In a pension buyback, you pay a fixed amount to purchase years of missed pensionable service to enhance your retirement pension. For example, you can miss pensionable service years when in your earning years you:
Thereby losing the opportunity to accumulate years of service in the pension plan.
The amounts of PA and PSPA go on to reduce your maximum RRSP contribution amount for the current year.
Let’s say you want to determine your maximum RRSP contribution for 2023 and you earned:
To compute the maximum RRSP contribution follow these four steps:
Compute 18% of your earned income. In your instance, earned income will be $90,000. Taxable capital gains are disregarded while computing earned income. Thus, 18% of your earned income = 0.18 x 90,000 = $16,200.
On www.canada.ca, you find the RRSP dollar limit for 2023 is $30,780.
Take the lesser of the above two amounts. The lesser amount = $16,200.
To $16,200, add the unused RRSP contribution of $7,000 and subtract your pension adjustment amount of $3,000.
So, your maximum RRSP contribution = $16,200 + $7,000 – $3,000 = $20,200.
Let’s take the above example. Since we worked out that your maximum RRSP contribution is $20,200, this is the maximum that you can contribute in the current year (in this case, 2023).
You contribute an excess amount of up to 2,000 without any penalty. But, any amount beyond $2,000 will be subject to a penalty of 1% of the excess beyond $2,000 for each month (or part of the month) that this excess contribution exists. For example, if your maximum RRSP contribution is $20,200, you may contribute:
$20,200 + $2,000 (excess amount not subject to penalty)
However, if you contribute, say, $23,200, there will be a penalty as computed below.
Split the amount of $23,200 as shown:
1. $20,200. This will not attract any penalty.
2. An excess amount of $2,000 which escapes any penalty.
3. An excess amount of $1,000 (which is beyond the excess amount mentioned in 2 above). This excess of $1,000 will attract a penalty of 1% for every month (or part of the month) that it remains in the RRSP.
Thus, you will pay $10 (i.e. 1% of $1,000) as a penalty for each month or part of the month that this amount remains in the RRSP.
If you make an excess contribution, make sure to withdraw it immediately to reduce the penalty as much as you can. Besides, you are not allowed to deduct from income any excess contribution. It, therefore, helps to avoid making excess contributions in the first place.
Yes, the deadline to make an annual RRSP contribution is typically at the end of February or early March for the preceding tax year. For the 2023 tax year, the deadline to make an RRSP contribution is Thursday, February 29, 2024. Most banks send deadline reminders so that you take advantage of this tax-saving benefit.
If your financial institution goes out of business, the Canada Deposit Insurance Corporation (CDIC) insures up to $100,000 in deposits in seven categories.
The CDIC covers insurance up to $100,000 for the RRSP deposit category. Additional information on this is available at www.cdic.ca.
You can withdraw RRSP funds at any time. But any funds that you withdraw will be added as taxable income for the year that you withdraw funds. In other words, you will not get a tax break when you withdraw funds.
Two plans allow you to withdraw RRSP funds without being subject to taxes or interest:
1. Home Buyers’ Plan (HBP)
2. Lifelong Learning Plan (LLP)
However, both of these plans require you to pay back the amount that you withdraw. You must pay back the funds that you withdraw each year so that the amount that you withdraw for the HBP is paid within 15 years for the HBP and 10 years for the LLP.
When you withdraw RRSP funds for either program you will lose the tax-deferred income that you could have made on the amount that would have remained within your RRSP. Moreover, if you’re unable to pay back the annual dues, they get added to that year’s income and you’ll need to pay taxes on that amount.
While you can withdraw from or register the RRSP at any time, you must deregister it by the end of the calendar year in which you turn 71. At that point, you have three options:
1. Transfer your RRSP proceeds to a registered retirement income fund (RRIF). Click here to learn more about RRIFs.
2. Withdraw the RRSP proceeds and pay taxes on the same in the year that you receive the proceeds.
3. Use the RRSP proceeds to purchase eligible annuities.
A beneficiary is a person your RRSP funds will go to if you die before your RRSP matures. You can name anyone of your choice as a beneficiary of your RRSP. However, from the tax deferral standpoint, it is better to name the following:
Let’s say you make more money than your spouse (or common-law partner) does. And you know that the maximum RRSP contribution limit is restricted by your earned income.
If your spouse makes less money than you do, then the amount they can contribute to their personal RRSP will be lower. However, you’re able to make greater contributions to your own RRSP.
Now if you expect that your spouse’s earnings will continue to be lower than your earnings in the future, it makes sense to contribute more to a spousal RRSP. As well, if you withdraw funds from a spousal RRSP you will pay a lower tax rate on those funds.
Your contribution to the spousal RRSP will be limited by your personal limit. But because you make the contribution, you get to claim this as a deduction.
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In summary, an RRSP can be a great way to save for your retirement in Canada. When you understand the financial benefits of an RRSP you can begin to save sooner and benefit from an early start.