- Canada leads G8 in proportion of residents born outside the country
- Almost half of new Canadians identified finding a job as the top challenge they face after arriving in the country
- More than 80 per cent of new Chinese-Canadians and South Asian-Canadians are focused on having enough money to cover daily expenses as their top financial priority
TORONTO, ONTARIO--(Marketwired - Oct. 1, 2014) - According to a new report by the BMO Wealth Institute, newcomers to Canada face a myriad of challenges - including key financial hurdles - after having moved to their new country. The report, Finding the Path to Financial Prosperity for Newcomers to Canada, also outlines key considerations for new Canadians to get their finances in order.
According to Statistics Canada, between 2006 and 2011, about 1,162,900 foreign-born people immigrated to Canada - accounting for 3.5 per cent of the total population of Canada in 2011. Further, as of 2011, 20.6 per cent of Canadian residents - more than 6.7 million people - were born outside of the country. Compared to other G8 countries, Canada has the highest proportion of foreign-born residents.
"Immigration is important to Canada's growth and future prosperity," said Chris Buttigieg, Senior Manager, Wealth Planning Strategy, BMO Financial Group. "Starting a new life in Canada can be an exciting experience, but there are many unknowns and challenges to adapting to a new country. These include key financial considerations."
The report examined the top challenges new immigrants face when arriving in Canada:
- Finding adequate employment (46 per cent of new Canadians)
- Learning a new language (26 per cent)
- Adapting to the weather (16 per cent)
- Missing support from the homeland (13 per cent)
- Financial constraints (11 per cent)
"With all of the obstacles that new Canadians face, it is all the more important to ensure they have their financial house in order," noted Mr. Buttigieg.
The report also examined the top financial priorities of two communities in particular: new Chinese-Canadians and new South Asian-Canadians. The top focus areas identified include:
- Having enough money to cover daily expenses (88 per cent of new Chinese-Canadians, 87 per cent of new South Asian-Canadians)
- Saving for children's education (64 per cent of new Chinese-Canadians, 79 per cent of new South Asian-Canadians)
- Saving for illness (60 per cent of new Chinese-Canadians, 79 per cent of new South Asian-Canadians)
- Saving for retirement (61 per cent of new Chinese-Canadians, 67 per cent of new South Asian-Canadians)
- Saving for parents' retirement (55 per cent of new Chinese-Canadians, 73 per cent of new South Asian-Canadians)
The BMO Wealth Institute offers the following insights to help new Canadians navigate the financial landscape:
Establish a credit history: It is important to start building a good credit history as early as possible after having arrived in Canada. Build a credit score by starting with a small line of credit or credit card, and then paying off balances as required.
Build a budget: Keep track of all expenses for three months using a BMO Cash Flow Worksheet (http://www.bmo.com/media/financial-planning/fp_worksheets/cashflow_en.html) then estimate how much you spend per year in each category.
Know your tax obligations: As a new resident of Canada, you will be responsible for paying taxes on all of your worldwide income. It's also important to consult with a qualified tax professional on the status of foreign property that you own.
Develop a financial plan: A financial plan strategically allocates financial resources towards achieving financial goals. One significant way to help achieve these goals is to minimize the amount of tax payable on income earned each year. Tax-free plans such as Tax Free Savings Accounts (TFSA), and tax deferred plans such as Registered Retirement Savings Plans (RRSP) are key tools that are incorporated into financial plans in order to reach specific savings goals, such as for the purchase of a home or for retirement. Another tax advantaged plan that is often included in a financial plan is a Registered Education Savings Plan (RESP), used to save for a child's future post-secondary education.
Speak with a financial professional: A financial professional can help you develop a personalized financial plan that incorporates your financial goals for today and into the future.
*Source: data cited is from Statistics Canada reports, with the exception of the top financial priorities data, which is from the 2010 Ipsos New Canadian Report on Financial Services.
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About the BMO Wealth Institute
The BMO Wealth Institute provides insights and strategies around wealth planning and financial decisions. The Institute's team of professionals have deep expertise around all aspects of wealth planning including retirement, estate, tax and insurance.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had more than $586 billion in total assets and approximately 47,000 employees at July 31, 2014.
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