How to Prepare Your Finances for Moving to Canada: What You Need to Know
Maybe you are wondering how to prepare your finances for moving to Canada. Moving to a new country can be an exciting and life-changing experience, but it often comes with its fair share of worries—finances being one of the biggest concerns.
Whether you’re relocating for work, school, or a fresh start, understanding how to prepare your finances for moving to Canada is crucial to ensure a smooth transition.
How do I prepare my finances for moving to Canada?
Before making the move, it’s essential to consider factors like the cost of living, budgeting, and immigration fees. Taking the time to properly plan and organize your finances can help you avoid surprises and settle into your new life more comfortably.
In this post, I’ll guide you through practical tips to help you get your finances in order, covering everything from saving more than you think you’ll need to opening a Canadian bank account and even managing tax obligations
1. Cost of Living in Canada
Before you even start packing, it’s crucial to understand how to prepare your finances for moving to Canada. A big part of that preparation involves researching the cost of living. Knowing what to expect will give you a clearer idea of how much money you’ll need to save before the move.
The cost of living in Canada varies significantly depending on where you plan to settle. For example, living in Toronto or Vancouver will likely cost more than smaller cities or rural areas. Be sure to look into housing, food, transportation, and other everyday expenses specific to the province or city you’re considering.
One helpful resource is Numbeo.com, where you can explore detailed cost-of-living data by city. It provides benchmark prices for housing, groceries, transportation, and more. For a deeper dive, check out my guide: Cost of Living in Canada: Basic Expenses for Newcomers.
2. Set a Realistic Budget
Once you’ve got a handle on the cost of living in Canada, the next step in learning how to prepare your finances for moving to Canada is setting a realistic budget. Creating a budget will help you figure out how much money you need to save each month to cover all your expenses before the big move. A quick budget review exercise can also help you avoid unexpected surprises along the way.
Keep in mind that you’ll face some extra costs when you first arrive. For example, most rentals require at least two months’ rent upfront. Additionally, many homes come unfurnished, so you’ll need to budget for furniture and basic household items to make your new place feel like home.
Another expense to plan for is winter clothing. If you don’t already have warm clothes, you’ll need to buy some for the Canadian winter, which can be expensive. Check out my tips on Winter Clothing in Canada – How to Dress During Winter in Canada to save money.
3. Save More Money Than You Think
The cost of living in Canada can be much higher than in some other countries—in our case, it was higher than back home. That’s why saving as much money as possible before your move is key.
If you already know which province you’ll be moving to, use the internet to research costs for rent, transportation, groceries, and more (check out Item 1 above for tips on how to do this). The sooner you start saving, the better prepared you’ll be.
Even if you plan carefully, unexpected expenses can come up when moving to a new country. Think about things like medical emergencies or car repairs. Having extra savings will give you peace of mind and help you handle these surprises with less stress.
4. Immigration Fees
When learning how to prepare your finances for moving to Canada, don’t forget to include immigration fees in your budget. These can include permit or visa application fees, legal fees, and other relocation expenses. It’s important to account for these costs as part of your overall financial plan.
The exact amount you’ll need will depend on the immigration program you’re applying for and whether you handle the paperwork yourself or hire an immigration consultant. Using a consultant can make the process easier but will also increase your expenses.
5. Eliminate or Reduce Local Debts
As you learn how to prepare your finances for moving to Canada, it’s important to look at your local debts. Once you’ve set a budget and timeline, create strategies to reach your savings goals—and reducing or eliminating debts should be part of that plan.
This may sound counterintuitive, but paying off local debts before moving can save you stress in the long run. If you’ve saved enough to clear your debts, I recommend doing so. Not only will it give you peace of mind, but it also means you won’t have to manage payments from abroad. Plus, it helps maintain a clean financial record in case you need to apply for a loan in your home country later.
6. Check for Automatic Payments on Your Bills
When preparing your finances for a move to Canada, it’s important to review any automatic payments or recurring withdrawals set up in your bank account. Many banks allow you to automate bill payments to make life easier, but these can cause issues if you forget about them after your move.
If there are services deducting money automatically and you no longer need them, cancel or pause those payments. It’s a simple way to avoid unnecessary charges.
Make sure to call your bank and check if there are any additional steps, like signing forms, to cancel these payments properly.
If you’re nervous about forgetting something before leaving your country, check out my 3-page checklist with over 40 things to do before moving to Canada.
7. Open a Canadian Bank Account
When figuring out how to prepare your finances for moving to Canada, one important step is setting up a Canadian bank account. You have two main options to consider:
- Create an international account from your home country
Some banks, like Scotiabank, allow you to set up a virtual international account before arriving in Canada. This option lets you deposit money into the account and finalize the process once you’re here. For example, I used Scotiabank, where I created a virtual account online, scheduled an appointment after arriving, and had my funds seamlessly transferred to my new Canadian account. - Open an account after you arrive in Canada
Another option is to wait until you’re in Canada and apply directly at the bank of your choice. Once your account is set up, you can look into transferring your funds from your home country.
No matter which option you choose, take the time to research different banks and account types. Fees, services, and benefits can vary widely, so finding the right fit for your needs is essential.
One great option to consider is Neo Financial, a modern and fee-free banking solution I personally recommend and use. It’s easy to set up, offers great cashback rewards, and has no hidden fees. You can learn more about their services by clicking here.
Other major banks in Canada include Scotiabank, National Bank, RBC, ICICI, and CIBC. Compare their offerings to find the one that works best for you!
8. Currency Exchange.
Understanding currency exchange is an important part of learning how to prepare your finances for moving to Canada. The exchange rate between your home country’s currency and the Canadian dollar can impact your purchasing power and the cost of goods and services in your new home.
If you’re relocating from another country, you’ll likely need to transfer money into your new Canadian bank account. It’s important to research your options and compare fees and exchange rates to ensure you’re getting the best deal.
In our case, I kept a close eye on the value of the Canadian dollar to transfer money when the exchange rate was most favourable. Some services we have used successfully to transfer money between Canada and Chile include Currency Bird, Remitly, Wise, and Western Union.
The last service I tried was Wise, which offered me a much better rate than all the others. It’s a service I use and highly recommend. Wise is a reliable way to transfer your funds to Canada without losing too much to hidden costs.
Be sure to explore these options and pick the one that works best for your situation. A little research can save you a lot of money when transferring your funds!
9. Apply for a Credit Card
When figuring out how to prepare your finances for moving to Canada, applying for a Canadian credit card is an essential step. A credit card can help you build a credit score, which is crucial for many aspects of life in Canada, such as renting a house, buying a car, or applying for loans.
If you’re not familiar with the concept of a credit score, I recommend researching it. Understanding how it works and why it’s important will help you make better financial decisions as you settle into your new life in Canada.
As a newcomer, getting approved for a credit card can be challenging since you won’t have a Canadian credit history. One solution is to apply for a secured credit card. This type of card requires a deposit, making it a great way to start building your credit.
This is how I started. The bank held my deposit for the first year, after which I could increase my credit limit and get my money back. It was a simple and effective way to establish my credit score in Canada.
10. Consider Your Tax Obligations.
Understanding Canadian taxes is an essential part of preparing your finances for a move to Canada. You’ll be subject to Canadian tax laws once you move, so it’s important to research the legislation and know your tax obligations ahead of time.
Depending on your situation, you may need to file tax returns in both your home country and Canada. This can get complicated, so consulting a tax professional is a smart move to ensure you’re meeting all your obligations.
Keep in mind that this post is for educational purposes to guide your research. Because tax agreements between countries can be complex, it’s a good idea to seek professional advice early to avoid any surprises.
11. Growing Your Savings
When thinking about how to prepare your finances for moving to Canada, it’s important to consider ways to grow your savings once you arrive. One great option is to look for a high-interest savings account or other financial tools that can help your money work for you.
I personally use a savings account with Neo Financial. Additionally, I have a Tax-Free Savings Account (TFSA) with Wealthsimple, where I can invest and grow my savings without paying taxes on the earnings.
Take the time to explore other financial products that suit your needs and goals. A little research can help you make the most of your savings in Canada.
12. Education
If you have children, researching the education system is an important part of learning how to prepare your finances for moving to Canada. Look into school options and any costs associated, such as uniforms or supplies.
The good news is that, according to conversations with some newcomer parents in Ontario, public schools are free. In most cases, the only extra cost might be for uniforms or small supplies. However, it’s important to check this for the specific province you’re moving to, as policies can vary. You can check more details at New to Canada: Understanding the Education System for Your Children.
Conclusion
I hope this post has provided you with a clear roadmap on how to prepare your finances for moving to Canada. From understanding the cost of living and opening a Canadian bank account to managing taxes and growing your savings, every step is important to ensure a smooth financial transition.
Remember, moving to a new country is a big step, and proper financial planning can make all the difference. Take your time to research, compare options, and explore the tools and services that work best for your situation. Whether it’s setting up a high-interest savings account, applying for a credit card, or learning about the education system, preparation is key.
If you’re ready to dive deeper into the planning process, don’t miss my guide: 40 Things to Do Before Moving to Canada. It’s packed with tips to help you cover all the bases before your big move.
Good luck, and enjoy this exciting new chapter in your life!