Four budget and money management strategies for newcomers
Credit to Author: Staff Writer| Date: Wed, 22 Feb 2023 13:00:25 +0000
Hyder Hassan was introduced to the concept of budgeting early on in his life in Canada. He was only 15 when he immigrated to this country with his family and started working to help with household expenses. “Budgeting was the reason I started working with my mother at Harvey’s in the first couple of weeks after arriving in Canada,” says Hassan, who today works in the immigrant settlement sector, as CEO of Immigrant Services Calgary, but started his career in financial services.
“As we calculated the monthly rent and food costs in our budget, I realized that my family would need my additional income to ensure our needs were met,” he recalls of his early days in Canada.
It’s common for newcomer families like Hassan’s to have to be careful with their money as they settle into their new lives in a new country. They may have challenges in finding good-paying jobs, at first, and may have to rely on the savings they brought with them. So making a monthly household budget is a good way of understanding how much money is coming in — income — and how much is going out — expenses, and how much is left over to build your savings, rather than deplete them.
Hassan says it was important for his family to budget and take control of their own finances, adding that going to the banks for help was intimidating. “Perhaps, as newcomers back then, we weren’t high-value clients, and the experience was very transactional and limited to just opening accounts. We weren’t advised [about budgeting for things] like RESP or RRSP accounts and found out about these resources later in our settlement journey from friends and family,” he says.
Benefits of budgets
Taking the time to create a budget can be a step toward a strong financial foundation for your new life in Canada, especially given today’s cost-of-living increases and housing affordability concerns. In addition to earmarking money for essential expenses like rent, as Hassan did, budgeting can help you set limits on non-essential spending. It can help you to live within your means and prevent you from falling into and relying on debt for everyday living.
It can also help you set aside money to make short- and long-term plans like buying your first home or car, saving for a child’s post-secondary education, save for your own retirement, pay for professional development or training costs, or for unexpected emergencies like a broken-down vehicle.
Four money management strategies
Ready to start budgeting? You don’t have to be a trained financial management expert. Here are four simple money management strategies that will go a long way in building your financial stability in Canada.
- Know your actual income
The first strategy is to know how much of your income is really coming home. Understand how much gets deducted from your paycheque in the form of taxes, pension deductions, union dues and more. Do the same for your partner or other contributing family members’ income(s).
As well, do you have any additional sources of income? Here, you could add any part-time, side-hustle or freelance income you’re earning, or government benefits like the Canada Child Benefit or income assistance.
- Track your monthly essential expenses
Next, look at the essential expenses that you must pay for each month, such as rent and food.
Budgeting these expenses in relation to your income allows to take control of your money and reduces stress. For many of these regular expenses, you can set up automatic contributions through online banking so you never miss an important payment.
- Pay yourself, too
Have you heard of the saying “pay yourself first”? It’s an important strategy for saving and building wealth as a newcomer or Canadian-born individual. As you set up your payments for essential expenses like rent, consider budgeting for a monthly amount that gets automatically transferred to your savings account.
It worked for Hassan. “I learned to save 10 to 20 per cent of my salary via automatic contributions,” he says.
As these savings grow, you can plan out what you’re saving for, or how you may want to invest the funds.
“I always plan short-term goals in one-year cycles (like paying down debt or investing) and longer-term goals in five- to 10-year cycles,” Hassan says.
- Look at your daily spending habits
A budget is a tool that can also help you track your non-essential daily or weekly expenses, such as your daily cup of coffee. It’s easy to get caught up in frivolous spending, especially with small-ticket items, not realizing how much they add up.
In addition to keeping track of what you spend, consider ways to reduce your spending so you can put more of your money toward future savings. Remind yourself what you wish to save for and work toward reaching those financial savings goals.
Keeping track of the money you make and the money you spend will help you stay in control of your finances and keep you on track toward reaching your Canadian dreams.
Learn more about saving for the future in our upcoming articles in our “Achieving Your Financial Goals” section of this guide.
The New Canadian’s Financial Pathway to Prosperity, an informative guide presented by Canadian charity, Windmill Microlending, shares tools and tips to help you build a financial foundation in Canada while setting you up for long-term prosperity. As a charitable organization, Windmill focuses on supporting immigrants and refugees in establishing their lives and careers in Canada, offering affordable loans to pay for the costs of training, education and professional development. Learn more on Windmill Microlending’s website here.
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