Setting Up Finances in Canada in 5 Easy Steps
Setting up finances in Canada is essential to starting a good life. Here are 5 easy steps to get started.
1. Get SIN
Most immigrant’s to-do list starts with applying for a Social Insurance Number (SIN). I was no different. I applied for mine in-person at a Service Canada Centre on the first working hour after I landed in Canada.
What is a SIN?
The Social Insurance Number (SIN) is a unique 9-digit number issued to a Canadian citizen, a permanent resident, or a temporary resident.
The first digit of the SIN has a meaning. Numbers 1 to 7 indicate the province where the SIN was registered. SINs that start with the number 9 are issued to temporary foreign workers. The numbers 0 and 8 are not used as first digits in SINs.
What are the uses of a SIN?
The main uses of SIN as noted in the Government of Canada’s website are to:
- obtain employment
- pay statutory contributions for and receive certain government benefits and services
- pay income tax and receive a tax refund
- provide to banks and institutions where interests are earned
For most immigrants, their ideal life starts with finding a job. Thus, applying for a SIN is an important step in setting up finances in Canada.
The Employment Insurance Regulations state that an employee should provide their SIN to their employer within 3 days of starting a job or within 3 days of receiving it.
Employers check SINs to verify an individual’s eligibility to work in Canada and the validity of a Social Insurance Number. They use this to provide information to the government about an employee’s income, the amount of income tax deducted, and the amount withheld for government benefit programs and services.
How Do I Apply For a SIN?
You can apply for a SIN online, by mail or in person for free.
Parents or legal guardians can apply on behalf of a minor. The Service Canada Website lists the requirements based on the mode of application and situation.
2. Open a Bank Account
After obtaining my SIN, I proceeded directly to a bank to open accounts and deposit my proof of funds.
What are the Main Types of Bank Accounts in Canada?
There are two main types of personal bank accounts in Canada: chequing and savings.
A chequing or checking account is used for day-to-day transactions. In contrast, a savings account provides a safe place to keep money while earning interest.
Where Can I Open An Account?
The International Monetary Fund states that Canada’s banking sector shows strong performance. It has solid profitability and sizeable capital buffers. Also, the country’s financial system is highly regulated and supervised. In short, your money is safe in a bank account.
You can open an account at a bank or credit union.
The five largest banks in Canada, otherwise known as the Big Five Banks, are:
- Royal Bank of Canada (RBC)
- Toronto-Dominion Bank (TD Bank)
- Bank of Nova Scotia (Scotiabank)
- Bank of Montreal (BMO)
- Canadian Imperial Bank of Commerce (CIBC)
In British Columbia, Vancity was the biggest credit union in 2020. But, this is just one of the numerous credit unions. Canada’s Credit Unions website is a great tool for finding a credit union in your community.
These institutions offer packages for newcomers. I assume that others have comparable offers as well. Shop around to find a financial institution that would best help you in setting up finances in Canada.
What Are the Requirements to Open an Account?
To open an account, you need to:
- go to a financial institution in person
- show an acceptable form of identification
- provide a Social Insurance Number when opening an interest-bearing account
The Government of Canada’s website, as well as the institution’s website, shares detailed information on opening an account. These include a list of acceptable forms of identification.
When I opened my first accounts, I provided my SIN and 2 pieces of ID. I used my original Confirmation of Permanent Residence (CoPR) and Philippine passport as proof of identification.
3. Build Your Credit History
What is credit history?
Investopedia defines credit history as a measure of a consumer’s ability and demonstrated responsibility to repay debts. Canada’s central credit bureaus use your credit history to give you a credit score.
What is credit score?
A credit score is a three-digit number that reflects how well you manage credit. Lenders look at your score to gauge the risk of lending you money.
A good credit score helps you qualify for loans and other credit products as well as lower interest rates. This is important when applying for a home mortgage or buying a car.
The higher the credit score, the better!
How Do I Start Building Good Credit History?
The internet offers unlimited resources on how to get a good credit score. These cite the length of credit history as one of the key factors. So experts recommend obtaining a credit card as soon as possible and using it responsibly.
4. Apply for A Credit Card
Applying for my first credit card in Canada was a breeze. I got mine when I opened my bank account.
Since I did not have a credit history, my bank offered a secured credit card. I made a security deposit of $1, 000, which they put in a guaranteed investment certificate. After a year, they converted my credit card to an unsecured one. They also made my security deposit available to me.
As I built my credit history, it became easier to get other cards. I was offered my second credit card as I was walking towards the train platform. The application process was so quick that I doubted the authenticity of the card. This was an unbelievable experience for someone who just moved from the Philippines. So, I made sure that I had enough cash as back up when I first used it. Amazingly, it worked!
After that, I got credit card offers while shopping in groceries and a department store. I also got an offer while walking at the airport. There is no guarantee that an application will be approved. But this shows that it is relatively to get plastic money in Canada.
5. Research Government-funded Programs and Incentives
The Canadian government has numerous benefits and incentives for its people. I strongly believe that knowledge of these programs helps tremendously in setting up finances in Canada.
An example would be the Tax-Free Savings Account (TFSA). A TFSA allows you to save money tax-free and is good for growing your savings.
Newcomers can also apply for Canada child benefit, the goods and services/harmonized sales tax (GST/HST) credit, and any related provincial and territorial programs.
Setting up finances in Canada can be overwhelming. But all the processes I went through were quick, pleasant, and efficient. Best of all, I was served with the trademark Canadian friendliness.
I hope these 5 easy steps help you as much as it helped me.