To most of us, Boxing Day in Canada is the holiday that comes right after Christmas. Many Canadians don’t know the history of the holiday or what its true purpose was. Today, it’s a shopping holiday where you can get great deals on everyday items. It was not always this way, however. Let’s explore the history of Boxing Day and what it has transformed into today.

When Is Boxing Day?

Boxing Day is an international holiday that many countries around the world celebrate. The holiday is celebrated on December 26, which is the day after Christmas Day. If the day falls on a weekend, the holiday shifts to the following Monday. 

Why Do We Celebrate Boxing Day In Canada?

Boxing Day originated as a day to give gifts to the poor. After giving each other gifts the day before, the wealthy would box up gifts and give them to the poor. Most people serving the upper class had to work on Christmas and did not get the day off. As a result, the following day would almost serve as their Christmas. Boxing Day also became a time for the wealthy to donate to the poor.

While the idea of boxing day has been around since the 1600s, its official origin was never confirmed. Most people believe that the day was officially established in Britain during the reign of Queen Victoria.

Today, many countries linked to Britain, such as some of the Commonwealth Countries, celebrate Boxing Day. Since Canada used to be a British colony, it too celebrates the holiday.

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Is Boxing Day In Canada A Statutory Holiday?

Boxing Day is a statutory holiday for all federally regulated employees. However, not all provinces made it a statutory holiday. The only province that observes Boxing Day in Canada as a statutory holiday is Ontario. This means that if you live outside Ontario and do not work in a federally regulated industry, Boxing Day will not be a statutory holiday for you. If you live in Ontario, however, it is a statutory holiday.

While Boxing Day was originally a day for giving gifts to the poor, it has undoubtedly transformed into a shopping holiday. In recent years, the term, “Boxing Week”, has started to become popular. This is because of the sales that take place during the week after Christmas. For some families, December 26th can also serve as a way to extend Christmas celebrations. As mentioned above, some Canadians have Boxing Day as a statutory holiday, so they can take the day off.

Boxing Day in Canada has become a great way to save on household items you are planning to buy. If you know you need a new TV, and Boxing Day is a month away, it is usually worth waiting. Boxing Day sales can save you hundreds of dollars if you plan and time your big purchases correctly. Things like electronics, furniture, clothes, and home renovation items usually face tremendous discounts during Boxing Week.

What Stores Offer Boxing Day Sales in Canada

From large corporations to local businesses, almost every store in Canada offers Boxing Day sales. In this section, we will look at some of the most common stores across Canada and what items you will find on discount.

Walmart

Walmart is one of the biggest corporations in the world. It also offers some of the biggest discounts during Boxing Day in Canada. Most items sold by Walmart receive sales during Boxing Week, with the exception of food items. The items that receive the biggest sales are electronics, appliances, and furniture. You might also be able to find discounts on various other items such as toys and clothing.

Best Buy and Staples

Both Best Buy and Staples are some of the best brick-and-mortar stores to buy electronics. They are famous for holding massive sales during certain times of the year, including Boxing Day. Best Buy and Staples also have Back-to-School Sales and Black Friday sales so it is a good idea to be on the lookout for both.

Canadian Tire

Canadian Tire is another big retail store that offers great deals on Boxing Day. You will find a wide variety of items on sale if you do your research. Some common products that are usually on sale include small kitchen appliances, kitchenware, garden tools, and much more. To get a better idea of what items in Canadian Tire are on sale, click here.

These are just some examples of stores that offer Boxing Day deals. Almost all big retailers, and even some small businesses, extend the sale for a week. Make sure to be on the lookout for such sales if you are planning to make a big purchase in the near future. 

While the holiday began as a way to give gifts to the poor and allow people to enjoy a day off, it has taken on a completely different role today. Commonly referred to as a shopping holiday, Boxing Day in Canada has become a great way to save money. Today, the holiday mainly serves as a shopping holiday and an extra day to enjoy the Christmas holidays.

Salary negotiation is a touchy subject. Most job seekers are still unclear about the best practices for negotiating their salary. As a newcomer to Canada, the subject can be even more intimidating. You’re new to the country and you may be unfamiliar with common job search practices. Many people fear that if they ask for more money they will miss out on the job. Others may immediately accept a job without knowing you have the option to negotiate your salary and other aspects of your job. 

Negotiating your salary in Canada is common. It’s part of the hiring process. So, you shouldn’t shy away from the topic. As with other aspects of the job search process, there is a time and place for everything. There will be some jobs where there is no room for negotiation. As well, there are certain times when it is better to discuss money with your potential employer.

Here are some specific actions, tips, and advice for when and how to negotiate your salary in Canada. 

Can You Negotiate Your Salary in Canada?

This applies to entry-level positions as well. Most people incorrectly assume entry-level salaries are non-negotiable. But this is not always true. Companies will make exceptions for candidates they feel are the right person for the job. However, you usually have less wiggle room for these types of positions because these jobs are easier to fill. 

Common Situations When You Will Negotiate Your Salary

There are a few common situations where you will find yourself in a position to negotiate your salary. They are:

• Multiple job offers: You are in the process of interviewing with a company when another employer shows interest in you. The first company makes you a competitive offer to secure your services. You have the option to negotiate to ensure you receive a strong employment offer.

• Low salary offer from the employer: You received a job offer from a company you want to work for. But the salary is lower than you expected. It is important to negotiate to ensure you receive a salary you are worth.

• A recruiter reaches out to you: You are happy in your current role. A recruiter or other employer reaches out to you to inquire about your willingness to make a career move. You don’t want to leave your current job, but you also want to maximize your earning potential. So, you ask for a raise, knowing you have other job options.

Why Should You Negotiate Your Salary?

Salary negotiation is a normal part of the job search process. While it can be an intimidating process, it’s completely normal. Here are some reasons you should negotiate your salary before accepting a job offer:

• Higher earning potential: It’s simple, the people who negotiate their salary make more than those who do not.

• Employers can offer more: Companies do not usually put their best offer up first. There is often wiggle room.

• Other compensation is involved: Even if a company is not willing to offer you a higher salary, they make be willing to offer you other types of compensation such as an annual bonus, higher commission, stock options, or even more vacation time.

• Know your value: When you negotiate you are showing an employer that you know your value.

• If you don’t ask, you won’t get what you want: Higher salaries are often an option, but if you don’t ask, an employer is not going to offer them.

How To Approach Salary Negotiation in Canada

If you are going to negotiate your salary, you need to approach it the right way by taking these actions:

Get Everything in Writing

This is important and often overlooked by employees. Get all agreed-upon salary terms and conditions in writing. This will ensure everything you have spoken about is documented.

Things to Avoid When Negotiating Your Salary in Canada

Here are some important pointers to keep in mind. Avoid doing the following as part of the negotiation process:

Ask Before You Receive an Offer

The timing of your negotiations is important.  Ideally, you should wait until you have received a formal offer in writing.  You should also feel free to ask for some time to consider the offer to formulate your salary request.

Focus Only on the Money 

It can be very easy to get yourself into a mindset where you are only thinking about salary. Salary is important but it is not the only thing. Consider the possibility of a signing bonus, commission, and other forms of compensation as part of your job offer package. Other things to negotiate on top of or in addition to base salary include:

• Remote work

• A one-time signing bonus

• Higher commission rate

• Ongoing professional development

• Tuition reimbursement

• Professional dues

• Additional vacation days.

Show Your Hand

Don’t reveal your bottom-line number or you will lose your leverage in the negotiation. Know your worth and do not be afraid to ask for it. Employers will respect this. Your offer will not disappear because you want to negotiate. In most cases, the worst thing that will happen is they will say no to your request for a higher salary. 

Salary negotiations can be intimidating, but they are necessary if you want to be paid what you are worth. It’s also a common practice in the hiring process in Canada. So if you don’t try to negotiate salary, you could be leaving money on the table. 

For information, tools, FREE webinars, and more visit our Finding a Job in Canada resource page. Get the help you need to achieve your career goals in Canada!

by prepareforcanada.com | Oct 15, 2024

While there are many things to do, here are the top 10 financial steps to take before you leave for Canada. And when you take these steps, it will prepare you for better financial footing when you arrive in Canada.

Having a Canadian bank account before departure has many benefits. You can use the statement as proof of funds to the immigration officer at the Canadian airport, you don’t have to be carrying cash and worrying about safety and lastly, you have funds ready for you to use and don’t have to wait a week before a draft clears. Scotiabank is one of the few banks that allow you to open a bank account online while in your home country.

Pay your debts. Review your insurance policies. Cancel your monthly services and obtain the necessary proof. Sell your properties or make arrangements on how to manage them from afar. In the stress of moving to another country, it is incredible how easily we can overlook certain details and leave behind loose ends. Never say “I’ll deal with it later,” because settling financial affairs from a distance often turns out costlier and more stressful.

Before you leave, research basic costs in the city where you plan to settle. While you won’t be able to estimate your monthly expenses down to every detail, it’s helpful if you know the following costs:

• average monthly rent

• transit

• basic costs for utility bills

• medical insurance,  and

• special services you may need.

While you can curb spending on things like food, entertainment, and clothes, you will find that other expenses are less flexible. You want to ensure you have enough money for the essential living costs. Find out more about the cost of living in Canada.

Building a strong financial foundation is vital to your success. Join this webinar to start your banking journey in Canada on the right foot!

Newcomers to Canada may be eligible for certain tax credits and other benefits. You can file an income tax return even before you have an income history in Canada.

Make sure you and your spouse document your earnings history for the two years before you immigrated to Canada.  Also, gather the originals of all the documents that may help you to show proof of your past insurance and credit history.

On the Canada Border Services Agency (CBSA) website, you can research the permitted and forbidden goods you can bring through customs. You don’t want to find yourself in the unpleasant situation of paying fines or extra taxes or having to dispose of certain goods.

Make a list of everything you need to buy to set up a home, down to forks and spoons. The things we take for granted at home cost money, every single one of them. The list may be frighteningly long, but you should always have a realistic idea of your needs. This way, you will avoid getting carried away when you shop for your new life in Canada.

The Canadian government requires immigrants to show they have the minimum financial funds to support themselves and their dependents for six months after arrival. However, it’s better if you have more than the minimum financial funds. The bigger your city of destination, the sooner your savings will shrink.

If you can take on extra work or cut down on unnecessary spending, do it. These are critical financial steps before you leave for Canada that will help you to minimize financial stress.

Make your life easier when coming here by taking advantage of any useful service that is cheaper in your home country. For example, in Canada, like in most advanced countries, dental services are notoriously expensive, and so are many other medical or cosmetic procedures. Repairs and restorations of items such as artwork or other valuable possessions will, most likely, be more expensive here as well.

If you don’t have any friends or family willing to offer temporary accommodation, research the cost of short-term rentals well in advance, and make reservations. Pick a cost-effective and convenient location that will allow you to move around easily while you search for a permanent home.

Know in advance how you will be handling your money. Will you be carrying cash? Will you be relying mostly on plastic? Many hotels here do not accept cash and require a credit card, and rental buildings require payment by debit card or cheque.

It can be stressful carrying around too much cash, but you can easily lose track of spending solely relying on plastic. So make a point of checking your balance.

Moving to a new country will require a solid financial plan. And when you take these financial steps before you leave for Canada you’ll be better able to manage your finances.

Read more about banking and financing with Prepare for Canada.

A lesson many newcomers learn when they arrive in Canada is that you need credit to pay for large expenses, buy a car, or purchase a home. However, it’s difficult to borrow without a credit history in Canada. 

Opening a bank account before you arrive in Canada offers many benefits including transferring funds before you travel to Canada. 

For newcomers and international students arriving in record numbers, it’s helpful to understand how the currect inflation rate in Canada can affect how much you pay for housing, groceries, transportation, and other expenses.

Protecting yourself and your family against unexpected danger and risk is what insurance in Canada is all about for newcomers to Canada and international students.

If you became a permanent resident and lived in Canada, even for a short period, filing your first income tax return with the Canada Revenue Agency (CRA) can provide financial benefits.

by Zain Usmani | Oct 15, 2024

For newcomers, it’s not uncommon to face an uncertain financial situation in your first few years. An emergency fund can help you meet unexpected costs, manage expenses while searching for employment, or stay afloat if you face a job loss. Unexpected expenses can arise at any time, anywhere to anyone. Those who are prepared will walk out without bearing too much harm to their financial health. A good way to make sure you can survive a financial crisis is to save money for an emergency fund. This article covers the different types of emergency funds and how you can save money for each fund. 

An emergency fund is a pool of cash that is set aside to be used in the case of an emergency. It should be stored completely away from your checking/saving accounts to ensure that you are not tempted to use it for daily expenses.

The purpose of an emergency fund is to keep you financially secure. When an unexpected expense arrives or you lose your job, this fund will help you cover expenses. Your fund could be used for emergencies such as:

• Urgent medical, dental, or vet bills

• Critical home repairs (i.e. a leaky roof)

• Replacements for an essential major appliance (i.e. refrigerator or stove).

That is why it is important to have at least three to six months of living expenses in your emergency fund. This type of fund is called a traditional emergency fund. However, it is not the only type of emergency fund that will help you.

Emergency funds are a very important asset to have because they can help you get through a financial crisis without bringing much harm to your financial health. Even so, a traditional emergency fund can take years of saving money to build. Fortunately, there are many types of emergency funds, some of which are easier to save money for. Let’s take a look at three different types of funds:

1. A traditional emergency fund

2. Stash of Cash (having cash on hand)

3. Passive income.

A traditional emergency fund is the biggest fund on this list. Because of this, it can take years to save up money to build a traditional emergency fund. Generally, a traditional emergency fund should cover three to six months of your income. This means that if you lose your job, you will have enough money in your emergency fund to pay all the bills for several months. 

A traditional emergency fund can also be used for things such as health emergencies, auto and home repairs, and any essential need that requires a large amount of money immediately. 

A stash of cash isn’t a big emergency fund and it is easy to save up money for one. This type of emergency fund can come in handy during a natural disaster or a power outage. Basically, you need cash in any situation when you can’t withdraw money from an ATM. Your stash of cash could be anywhere between $500 to $1500. It should be enough to pay your expenses for a week when an ATM is inaccessible. 

The biggest concern about keeping money at home is safety. Some argue that it is unsafe to have that much money in your home. This challenge can be overcome by hiding that money in a place that is easily accessible, but hard to find. Just make sure it is nothing too obvious like a money pouch or a wallet. 

Most burglaries happen very quickly so hiding your stash of cash in a good place is enough to keep your money hidden. If you are still concerned about safety, you can buy a money safe or locker to hide your money.

This third type of emergency fund isn’t even a fund at all. However, during a financial crisis, passive income can prove to be very beneficial. This strategy is also used by countries to avoid a nationwide financial crisis. The main idea here is to diversify your income. Here is how it works:

Most of us have one job that we rely on to pay all of our expenses. But what if you lost that job? How will you pay the bills? To avoid this, you can diversify your income. Simply put, you should find other ways to make money so that you will still have a flow of income that you can rely on to pay the bills if you lose your main job.

You can make passive income in many ways. Some common ways to make passive income are:

• Buying and selling used items on sites like Kijiji or Facebook Marketplace

• Fixing broken items and then reselling them

• Freelancing

• Starting a dropshipping store (e-commerce)

• Creating a course

• Creating a blog.

These are just a few ways to make passive income. There are countless other ways you can make extra money. You can also be a little creative and think of your own way to make money on the side. Overall, your objective should be to diversify your income source so that you can rely on other sources of income during a financial crisis.

Even when there is no emergency, passive income will help you save for your emergency fund and overall, have a higher household income. This will not only help you be financially secure but it will also help you grow financially.

Building a strong financial foundation is vital to your success. Join this webinar to start your banking journey in Canada on the right foot!

Six months of living expenses is a lot of money to save up for. For an average family, this can be $30,000 for a traditional emergency fund! As you may have guessed, this type of money can take years to save up for.

An emergency won’t wait for you to make your emergency fund. That is why you should start building your emergency fund as soon as possible.

Let’s look at three effective strategies to save money for an emergency. These strategies will help you save money for a traditional emergency fund because it takes a long time to save money for one.

The first step is to figure out how much of your monthly paycheck you must use to pay for necessary expenses. Such expenses include housing expenses, grocery expenses, and car insurance, to name a few. Things like Netflix subscriptions and eating out in restaurants are not included in your necessary expenses.

Once you have figured out your necessary expenses, try to find ways you can reduce those expenses. You can try to find deals at your local grocery store or shop around for cheaper car insurance rates. Here are some ideas that can help you reduce your monthly expenses.

Your next step should be to limit your spending on entertainment or wants. These expenses could include:

• streaming service subscriptions

• vacations, and

• eating out in restaurants.

Of course, I am not recommending that you completely cut down on your entertainment expenses but try to lower them to save money for an emergency fund.

The money you save at the end of the month can go towards your emergency funds, whether it be a traditional one or a stash of cash. You can continue to use this strategy even after you save up for your emergency fund as it will help you grow your savings.

If you need something more organized to help you sort out your finances, you can use a common budgeting strategy known as the 50/30/20 budget rule. 

This budgeting rule suggests that you use 50% of your income for necessary expenses, 30% for wants, and 20% for financial growth. Financial growth can include things such as:

• Saving

• Investing, and

• Building an emergency fund.

Of course, you can make changes to this rule however you like to make it work for you. In the end, you should put at least 20% of your income towards an emergency fund. At this rate, it would take only 2 ½ years of saving money for a six-month emergency fund. After this time, you can even continue to use this budgeting rule to help yourself grow financially.

Automated deposits are a great way of saving money for an emergency fund. If you don’t feel like you are good at managing your finances, why not let automation do the job for you. Even if you are good at managing your finances, automated deposits will still help you stay on track to achieving your emergency fund.

Automated deposits are really effective because they automatically put a portion of your earnings towards your emergency fund. That way, you won’t be tempted to use that part of your income for daily expenses.

Saving money for your emergency fund is an important way to manage financial stress. For newcomers, it’s important to prepare for financial uncertainty as you adjust to life in Canada. With these savings strategies, you’ll be able to manage a money crisis.

For more information about your financial first steps in Canada, visit our banking in Canada resource page. Get the essential information you need to manage your finances in Canada!

Read more about your financial first steps in Canada.

A lesson many newcomers learn when they arrive in Canada is that you need credit to pay for large expenses, buy a car, or purchase a home. However, it’s difficult to borrow without a credit history in Canada. 

Opening a bank account before you arrive in Canada offers many benefits including transferring funds before you travel to Canada. 

For newcomers and international students arriving in record numbers, it’s helpful to understand how the currect inflation rate in Canada can affect how much you pay for housing, groceries, transportation, and other expenses.

Protecting yourself and your family against unexpected danger and risk is what insurance in Canada is all about for newcomers to Canada and international students.

If you became a permanent resident and lived in Canada, even for a short period, filing your first income tax return with the Canada Revenue Agency (CRA) can provide financial benefits.

by Prepare For Canada | Oct 15, 2024

Financial stability is very important for anyone who has recently arrived in Canada. Even if you have a strong financial standing in your home country, you will need to establish yourself in Canada as well. Applying for a credit card is one of the first and most effective steps to build your credit and give yourself a buffer. 

Credit cards are convenient, they give you another payment option and they are important to establish your credit history. Paying off your credit card balance each month will help you build your credit score and help you qualify for larger loans and financial products in the future. This is important especially if you want to get a car loan or qualify for a mortgage. 

Applying for a credit card can seem overwhelming, especially if you are a newcomer to the country. You may not be familiar with the application process, the information you need, and if you will qualify. Here we will provide you with the information you need to apply for your first credit card in Canada. 

You will need the following information to apply for a credit card:

• Full legal name

• Date of birth

• Home address (in Canada)

• Phone number

• Email

• Employment status

• Annual income

Before you start applying for credit cards, note that applying will have an impact on your credit score. So, do not just start applying for a variety of cards to see which one accepts your application. You first need to assess your financial situation to better understand the type of card that will benefit you most. 

Ask yourself:

• What do you need the credit card for? (i.e. to pay bills, establish credit, use as an emergency fund)

• How do you plan to use it?

• Do you want to add a partner or family member on the card?

There are many different types of credit cards. They offer unique benefits. Depending on your situation and financial needs, these card features may make sense for you:

• Credit builders: If you have recently immigrated to Canada, lenders will consider you a credit builder. You can apply for cards that are specifically designed to help you build credit. If you have no credit or low credit you can apply for a secured credit card to start building up your finances. 

• Cash back: Get cash back on the purchases you make to help lower your monthly bill. Cash back percentages vary based on the card and lender. 

• Low interest: If you expect to carry a balance on your card from time to time, a low interest rate is a great option to minimize borrowing costs.

• Travel rewards: If you plan to travel back to your home country regularly, you can accumulate travel points that can help you save on travel costs. 

• Points cards: Earn points you can use to cash in at participating retailers. For example, AIR MILES and PC points.

Building a strong financial foundation is vital to your success. Join this webinar to start your banking journey in Canada on the right foot!

• Annual fees: Cards can start at $0 fees and range up to $100 per year or more. Many offer you the first year free.

• Late payment fees: Some cards charge a fee if you miss a payment or pay after the due date.  Late payments can also increase your interest rate. So make sure to pay on or before the due date.

• Foreign transaction fees: I you plan to use your credit card when you travel, be aware of the associated fees. 

• Income requirements: Your annual income will affect the cards you qualify for and your credit limit.

• Additional benefits offered: Many cards offer additional perks such as payment protection, travel insurance, roadside assistance, and an extended warranty. Look into all the benefits that you can use. 

• Ease of use: Getting a credit card from your current banking institution will make it easy to access your card online and connect it to your bank account. 

Once you have completed your research, now you can go ahead and fill out your credit card application. The most effective way to do this is online through the lender’s website. You can also apply over the phone and through the mail. 

If you applied online or over the phone, your application can be processed and approved in just a few minutes. Sometimes you will need to provide additional information to get approved. Once approved, you can expect to get your credit card in the mail in about five business days. 

You have a lot more options to consider than you think. Applying for the right credit card that matches your needs can help you solidify your financial situation.

For more information about your financial first steps in Canada, visit our banking in Canada resource page. Get the essential information you need to manage your finances in Canada!

Read more about your financial first steps in Canada.

A lesson many newcomers learn when they arrive in Canada is that you need credit to pay for large expenses, buy a car, or purchase a home. However, it’s difficult to borrow without a credit history in Canada. 

Opening a bank account before you arrive in Canada offers many benefits including transferring funds before you travel to Canada. 

For newcomers and international students arriving in record numbers, it’s helpful to understand how the currect inflation rate in Canada can affect how much you pay for housing, groceries, transportation, and other expenses.

Protecting yourself and your family against unexpected danger and risk is what insurance in Canada is all about for newcomers to Canada and international students.

If you became a permanent resident and lived in Canada, even for a short period, filing your first income tax return with the Canada Revenue Agency (CRA) can provide financial benefits.

Pay deductions can often be confusing and can come as an unpleasant surprise if you weren’t expecting them. Canadian workers have quite a few pay deductions that you should be aware of. Some of these are mandatory, like taxes, while others are voluntary, like union dues. These deductions make the difference between net pay and gross pay. Many pay deductions are there to help you in the future. However, you won’t be able to take advantage of the extra money if you do not know where it is and how you can access it.

Getting Your First Job in Canada

After you accept a job in Canada, you will receive a job offer letter. This is an exciting time! Your offer letter, also known as an employment letter, will include:

• Annual pay

• Method of payment and how often you will be paid

• Work schedule

• Job description and duties

• Workplace rules and policies

• Other employment conditions such as benefits and commissions.

The amount of money that is shown in the letter will not be the same amount that you will receive. This is because the amount on the letter is your gross pay.

Understanding Net Pay and Gross Pay

Understanding the difference between net pay and gross pay is important to make sure you put your money to the best use. Fortunately, net pay and gross pay are quite easy to understand.

Each time your employer pays you, they must deduct a certain amount from your paycheck. The amount of money they deduct depends on a few factors such as:

• The province you live in (each province has its own income tax rate)

• What type of job you have

• How much you are payed

• What programs you are part of (pension plans, Unions, etc.)

However, when an employer tells you how much you are going to be paid they are talking about gross pay. Gross pay is your pay before deductions. It is not actually what you are going to receive. Your gross pay includes bonuses, commissions, and overtime pay.

From your gross pay, your employer must make some deductions. The main deductions you will see on every pay stub are:

• Taxes

• Canada Pension Plan (CPP) and

• Employment Insurance (EI).

These deductions are not completely lost, however. Taxes go towards providing many public and social services in Canada. CPP and EI will also benefit you in the future when you retire or in case you lose your job.

After all the deductions have been made, the remaining money is now your net pay. This is the amount of money you will be taking home. Avoid confusing your gross and net pay because you need to budget your net pay and not your gross pay.

Your pay stub, or the letter you will receive with every pay, will have both your gross pay and your net pay. Your gross pay is listed at the top of the pay stub, followed by any deductions. At the bottom, you will find your net pay. This is the amount of money you will receive for that payment term.

Now let’s look at different pay deductions, what they are for, and how they affect your pay stub.

Payroll Deductions Can Help You be More Financially Secure

As you can see, many payroll deductions help you save for the future. However, you can take things further by adding a few more deductions to your pay, each payment term. I know it’s tempting to want all your money from each paycheque but it’s wise to save for the future.

A good way to save for the future is to set up automated deposits into your savings account or a Registered Retirement Savings Plan (RRSP). These automatic deposits contribute a portion of your paycheck into whatever account you want them to.

Saving for Your Future in Canada

You can refer to the 50/30/20 budgeting rule if you’re unsure how to budget your money. The rule recommends you put at least 20% of your pay toward savings. This way, you will have most of your pay for fixed expenses and entertainment while building savings over time.

If you plan to pay for your child’s post-secondary education, you can also open a Registered Education Savings Plan (RESP). An RESP is a great way to save for post-secondary education because the government will also contribute money to your RESP for every dollar you contribute. You can set up another automated deposit for this.

The best financial advice is to stick to a budget and automated pay deductions are no exception. Divide your money properly and have enough to pay for basic expenses before you set up any automated deposits. However, it may be wiser to make manual deposits if your income isn’t very reliable or if you are on a low income.

by Zain Usmani | Oct 15, 2024

Newcomers should know about the different types of bank accounts to use all the financial resources available to them. Knowing what each bank account is for will help you to put your money in the right place. Opening a bank account is one of the first things you do upon arrival in Canada. A bank account is a place where you can keep your money safe. And buying a house or using a debit card to pay at a grocery store would not be possible without a bank account. As well, a bank account makes you eligible for a loan such as a mortgage and is a convenient way to store your money.

A bank account is an account in which you can deposit and withdraw money. These transactions can be both negative and positive. A positive transaction is when you deposit money in your bank, making your account balance go up. A negative transaction is when you take out money from your bank account, making your account balance go down. These transactions decide what your account balance is, or how much money you have in your bank account.

With your bank account, you can store large amounts of money that you can withdraw at any time. However, not all bank accounts will allow you to withdraw money at any time. There are two main types of bank accounts; a chequing account and a savings account.

Opening a chequing account will probably be the first thing you do in Canada because it is the account you will use for your day-to-day expenses. It allows you to withdraw money at any time, making it a convenient way to pay for expenses such as your grocery bill and withdraw money from an ATM. Opening a chequing account will also get you a debit card. A debit card is a card that can make payments without cash. Almost every store in Canada has a debit card terminal so you will almost always have the option of paying digitally from your chequing account.

One thing to keep in mind is that most chequing accounts have a small monthly service fee as long as the account is running. Most chequing account service fees are usually around the $10 range. However, some chequing accounts have no service fees, called no-fee chequing accounts. 

Some chequing accounts also offer ways to avoid paying monthly service fees. Some ways to avoid service fees are to either maintain a set minimum balance or deposit a certain amount of money into the account each month. The minimum deposit is usually around $5000. This means that if you have more than $5000 in your chequing account, you will be charged no fee that month. A minimum deposit usually ranges from $300 to $500. This means you need to deposit at least the minimum deposit amount in order to avoid paying your chequing account fees.

Opening a savings account allows you to save and grow your money. Unlike your chequing account, a savings account earns you interest on the money you save. However, a savings account cannot be used for day-to-day expenses. There is a fixed number of transactions you can do from your savings account each month, and that number is usually three. If you do any more transactions than that, you will have to pay transaction fees which make a savings account inconvenient for daily expenses.

Opening both a savings and a chequing account is a great way to manage your money. Together, they have all the features to meet your financial needs. You can keep the money you need for your daily expenses in your chequing account while keeping any additional money in your savings account. That way, you can pay for your expenses while earning interest on the rest of your money.

Now let’s look into some more specialized types of bank accounts that will help you save for the future.

Canadian banks have many resources to help you achieve your financial goals. Some of those resources include specialized bank accounts. The types of bank accounts covered in this section will help you achieve your financial goals faster. These accounts are all registered, meaning they are registered with the Canada Revenue Agency (CRA) to provide tax shelters. All the specialized accounts listed below are great saving resources because they can help you save on taxes.

The accounts covered in this section are Registered:

• Retirement Savings Plan (RRSP)

• Education Savings Plan (RESP)

• Disability Savings Plan (RDSP)

Opening an RRSP is a great way to save for your retirement. An RRSP works by delaying when you pay taxes on your income. This can be both to your advantage and disadvantage. The reason this is considered a retirement savings plan is because you will be in a lower income tax bracket at the age of retirement. 

When you deposit money into your RRSP, it will come off your income directly and won’t be considered taxable income. For example, if your income is $50,000 and you decide to put $5000 toward your RRSP, the government will only make you pay income tax on $45,000 of your income.

This doesn’t mean you don’t have to pay taxes on that money in the future. When you withdraw money from your RRSP, that money will be considered as your income, and you will be taxed on it. 

So then what is the point of RRSPs? If it saves you from taxes now, only to make you pay taxes in the future, why open an RRSP account? The answer is simple. You will have to pay more taxes when you are earning compared to when you are retired. When you take out money from your RRSP at retirement, you won’t have to pay as much income tax compared to when you were working.

As the name suggests, opening an RESP will help you save for your child’s education. Here is how an RESP works.

Every time you deposit money into your RESP, the government of Canada will contribute some money to your RESP as well. This money is called Canada Education Savings Grant, or CESG. A basic CESG is 20% on top of your deposit. However, low-income families might qualify for a 40% CESG.

To put this into perspective let’s look at an example.

Let’s say you deposit $2000 to your RESP this year. With a basic CESG, the government of Canada will contribute an additional 20% of that $2000 to your RESP. 

$2000 x 20% = $400.

After your $2000 deposit, your RESP account balance will be $2000 (your contribution) + $400 (government’s contribution), which is $2400.

An RDSP is a savings plan intended to help people with disabilities save for a financially secure future. It works very similarly to an RESP. The government contributes money for every dollar you put in your RDSP. Unlike an RESP, however, RDSPs offer incredible returns, even as much as triple your contribution. The money contributed by the government is called the Canada Disability Savings Grant, or a CDSG. CDSGs will vary from person to person so they can even be as high as 300%!

RDSPs are an amazing way to save for the future and ensure a financially secure future for anyone with a disability. They offer some of the best returns on investments in Canada so if you are eligible for an RDSP, look into getting one.

To learn more about registered accounts in Canada, here is an article on RRSPs, RESPs, and TFSAs that explains each of those in detail, as well as some frequently asked questions.

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Traditional savings accounts offer very low-interest rates. It is safe to say that putting all your money into your savings account is not the fastest way to grow your money. There are many other ways to grow your money, whether it be through tax shelters or high-interest rates.

The bank accounts covered in this section are: 

• Certifcate of Deposit (CD)

• TFSA (Tax Free Savings Account)

• High-yield online savings accounts

A certificate of deposit (CD) is a savings account that offers higher interest rates than normal savings accounts. The catch is that you must agree not to withdraw that money for a set period of time. CDs can range anywhere from three months to five years. Something to keep in mind is that CDs that last longer tend to pay higher interest rates. 

In simple words, CDs are accounts in which you deposit money over a set period of time, for a fixed interest rate. Withdrawing your money before the CD ends will result in a penalty. This penalty will not only make you lose all the interest you earned, but it will also make you lose part of your original deposit.

As you can see, CDs have both benefits and disadvantages. How would you know if a CD is good for you?

If you have money that you know you won’t need in the next two years, you could look for a CD that lasts two years. For example, if you know you will buy a house in exactly two years, try to look for a CD that will give you good interest for the next two years. That way, you will grow your money at a higher interest rate and still have access to your money when you need it.

On the other hand, CDs may not be a good option if your financial situation is unreliable and you might need money at any time. Before buying a CD, you must be certain that you won’t need to withdraw any money before your CD ends. If you cannot guarantee that, CDs may not be your best option.

A tax-free savings account is one of the best accounts in terms of tax shelters. Unlike an RRSP, the main purpose of a TFSA is to grow your money without having to worry about taxes. It functions exactly opposite from an RRSP. The money you deposit into your TFSA is after-tax money, meaning you won’t save any taxes there. The benefit of a TFSA comes when you withdraw money. Any money you take out of your TFSA will not be taxed. This makes TFSAs a great investing account because any profit you make within your TFSA will not be taxed.

Opening TFSAs are great for people who want to start investing in stocks, mutual funds, bonds, or GICs. Since any money you withdraw from your TFSA is tax-free, any profits you make within your TFSA are not tax-deductible.

High-yield online savings accounts are accounts that are based completely online. However, since these banks don’t have a brick-and-mortar presence, they can offer higher interest rates, risk-free. In Canada, Tangerine is a bank that offers online banking, mobile banking, or telephone banking only which allows it to pass savings on to you, the customer.

A disadvantage to online banks is that it can take a couple of days to deposit money into them, so it isn’t very convenient to keep depositing money each month. If you have some money that you know you won’t need for a long time, you can choose to put it into an online savings account and just leave it there to grow for some time. The concept here is very similar to a CD, except there is no set period of time and no penalty for withdrawing money.

Remember that online banks function just like banks. This means that you can get CDs from online banks as well. Online banks usually offer higher interest rates for CDs than regular banks so this is something you may want to look into.

When you know about the different types of accounts, you can open a bank account that best meets your needs. Knowing what each bank account is used for, and the pros and cons will allow you to put your money in the right place.

For more information about your financial first steps in Canada, visit our banking in Canada resource page. Get the essential information you need to manage your finances in Canada!

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