Managing Finance in Canada

How much money do I need to settle down ?

It is more of philosophical question than actual finance question. The money requirements changes as you change your life style. Still, if you need some figure for ease of understanding, I would like to support the figures declared by Canadian Govt that you need at least $10,000 to survive next six months without job. I mean, you will be spending nearly $10,000 in your first six months. This figure pinches when you don't have a job for that long period.

Since this question is raised by the people who are planning to migrate to Canada, I can give idea in a different way. I will break down the question into smaller questions. You need to find answers to them and you can build an annual budget for yourself. You also have to prepare your mind on not to give up if you face problems in first one year. After one year or so, you start getting things coming your way.

Accomodation	How many rooms do I need for my home requirements ? Do I mind staying with another family to cut down expenses ? How long ? What kind of neighbourhood I like to stay in ? When I buy my own home, how much amount am I ready to pay as down payment ? What kind of furniture do I need in each rooms of my home ? What appliances do I need in my home?
Communication and Entertainment	What kind of telephone services (e.g. messaging, call transfer etc. ) do I need ? What are the durations, frequencies and locations for my international calls per month ? Do I need to subscribe to Cable or Satellite TV for entertainment ? What kind of internet connection do I need ? What electrical units I like to keep on for a longer duration ? eg lights, fridge etc. Do I like to spend for cinema house or renting videos ? Do I like to spend for organised sports, matches or such events ? Do I need to subscribe to newspapers, magazines and other periodicals ? What are my requirements for books and stationery ?
Commuting and Travel	Can I manage the discomforts rising with absence of own car ? Can I bear the waiting period of public transport ? eg 10 to 30 minutes If I buy a car, what do I expect in the car ? eg engine power, years, features etc When I buy my own car, how much amount am I ready to pay as down payment ? What are the various govt fees for driving licence and owning a vehicle ? Do I enjoy picnics, beaches, camping, hiking, fishing, boating etc. ?
Kitchen Guest Entertainment	How many times in a day, my family need to eat ? What kind of food my family need to eat ? How do I like to celebrate festivities and events ? How many events in a year my family celebrates ? What is cost of each event ? How many close relatives I will be having ? (A round number) How many guests visit me in a month ? (A round number)
Reflection of who you are	What kind of greeting cards are my style ? Do I like to visit restaurants ? What kind of restaurants appeal me ? What are my grocery items ? eg chocolates, cereals etc What are my beauty maintenance items ? eg perfumes, hair colour, lip sticks etc What are my personal hygiene items ? eg soaps, shampoos, towels etc Do I like to wear different colour clothes on different days ? Do I like my family to wear specific clothes on different occassions ? What are my clothing requirements ? When I invite guests at home, how I would like to take care of them ? Do I plan to take loan or credit cards ? How much will be interest payment ?
Cleaning, Health and Education	What are my washing requirements ? eg clothes, kitchenware etc. What medical supplies do I need for small ailments ? eg antiseptic, bandages, tablets Am I needed to take care of maintenance drugs for diabetes, blood pressure etc. ? Do I or my family visit medical center once in a week or month or a quarter ? Do I need me or my family to undergo some training or education ? Do I need to spend money for upgrading my professional skills ? What do I need to pay as training course ?
Savings	Savings are discussed below.

What do I do after landing ?

You will be given a list of things to be done when you land as a new immigrant. Govt of Canada makes sure you know what you need to do and the time frames are also provided there.

I suggest you work on two things upon landing.
1. Apply for Social Insurance Number on the next day of landing.
2. Apply for Health Insurance Plan on the next day of landing.

You may take few more days to finish the following tasks.
1. Open a bank account in a week's time.
2. Apply for library card in a month's time.
3. Apply for driving licence, as soon as you get Social Insurance Number.
4. Buy TTC tickets or pass, for your transportation requirements.

What are the tricks of cutting down expenses ?

The basic trick of cutting down the expenses is not to spend at all. However, if you fail at it, you may cut down the cost of housing by staying with another family. Newspapers, grocery stores, bus stops and other public places have at least one advertisement on sharing accomodation in basement or a spare room. These accomodations often share telephone, internet connection, cable television and laundry facilities. You might want to call them and check the place out. You may cut down your transportation expenses and time by taking a job and residence on public transit line like TTC.

Are there too many taxes?

The direct taxes are managed by Canada Revenue Agency. The basic of income tax in any country is simple. If you earn more, you will be paying more income tax. There are two government bodies levying income tax to you. The federal tax (FT) refers to the tax levied by the federal government and provincial tax (PT) refers to the tax levied by province you live in. The federal tax applies same across provinces, whereas provincial tax changes, as per provincial government.

Your salary gets reduced by deductions of PT, FT, EI and CPP. You already know what PT and FT is. EI is employment insurance. This amount accumulates and results into a relief when you lose job. CPP is Canada Pension Plan. This amount builds your pension amount. The retirement age is now shifted to 69 years. Isn't it good that government expects you to live longer than that ? As a thumb rule, your take home salary will be approximately 18% to 22% less than your gross salary.

In addition to that there is tax on purchasing goods and services. Federal government charges 7% GST and provincial government charges as per their resources. Ontario province charges 8% PST. However, there are a lot of essential items that are free from purchase tax.

What is child tax benefit ?

Government sends you a monthly cheque to support expenses for your child. The amount is calculated in relation with the family income. As the family income grows above 40,000 a year the support gets reduced a lot. The support amount is also based on the age of the child.

What do I do with my Savings ?

It is natural to put away something for the rainy day. You can put your savings with a bank. Each bank has a variety of accounts, you might want to know more about them as you go along. The quick and easy account to start with is your chequing account. You get a cheque book, which helps you to make payment by cheque for rent and other stuff and you get an ABM card (Automatic Banking Machine). You can use this card to pay for the things you buy from store, you can use this card to deposit and withdraw money. This card works as identification of your account with tele banking. At different places, you might be able to use this card as a proof of your identity. If you have a savings that covers more than two month's requirements, then you might want to look at different options of using your savings to work for you.

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