A simple guide to savings for new Canadians

Being in a new country is as exciting as it is intimidating. While there are so many opportunities ahead, there’s also plenty to learn, including cultural customs, government systems and financial best practices.

To help out newcomers to Canada, Simplii Financial asked me to look into some of the ways new Canadians can start saving. As the more than 5 million Canadians who will reach retirement age this decade will tell you, it’s important to start setting aside money for future milestones ASAP Opens in a new window..

The good news is that saving is simpler than you think. It happens little by little, but it can add up fast. It just takes the right mindset, focus and determination. You don’t need to make a 6-figure income or experiment with risky investments to build wealth. You just need to set goals, make a plan to save and then get the ball rolling.

The benefits of a healthy savings strategy go beyond the basics like preparing for retirement or having an emergency fund. For one, savings provide a sense of financial independence. They can also give you peace of mind in an unpredictable economy.

There’s also an element of improving your quality of life. Saving money can have far-reaching impact for you and your family, whether you’re putting money aside for a down payment on a house, starting a business or investing in your kids’ future.

Starting your savings today can pay off in exciting ways tomorrow. The typical Canadian retired couple who owns their home and is debt-free can enjoy a comfortable retirement on 50 to 60% of their working income. Learn about growing your wealth for retirement Opens in a new window.. This could be you.

There are many excellent options to help you save money for both short- and long-term goals. You simply need to pick the one that works for you. Start by familiarizing yourself with Canada’s most popular financial products and offerings.

• Options like Registered Retirement Investment Products are designed to help you prepare for retirement. With these products, your principal and interest are fully guaranteed, and there’s no minimum investment required.
• A Registered Education Savings Product is a great way to put aside money for your children’s post-secondary education. In this case, the federal government may do some contribution matching. And there’s more good news: any interest earned is tax-sheltered, as long as it stays in the plan.
• Guaranteed Investment Certificates (GICs), with both registered and non-registered options available, offer a safe and smart way to save quickly.
• Finally, when every penny counts, Tax-Free Savings Accounts (TFSAs) provide another awesome way to save without paying tax on the interest that you earn.

Learning how to grow your savings as a new Canadian doesn’t have to be stressful or complicated. In fact, it can be exciting. It’s all about goal-setting, planning and taking action.

Here are five things to consider.

1. Set your goals

You might have short-term goals, such as putting together a safety net or your first month’s rent, or long-term goals, like saving for a down payment on a house or business. Set goals that are S.M.A.R.T (simple, measurable, achievable, realistic and timely). Try not to overcomplicate them.

2. Make a plan

Financial planning is all about staying focused and training your brain to save. Link your goals to your plan. Set a timeline to reach each goal so you know how much you need to set aside each month. And don’t forget to celebrate when you reach your milestones.

3. Start saving

Once you take action and start saving each month, you’re on your way to achieving the success you want and deserve. Make sure to identify which savings or investment accounts best meets your goals.

4. Consider high-interest savings accounts

Don’t bank on your money growing in a chequing account. High-interest savings accounts or other investments can help you reach your savings goals faster.

5. Think about mutual funds

Self-managed or professionally managed investments such as mutual funds can help your money grow. By investing, new Canadians stand a greater chance of thriving over the long run Opens in a new window.. Fees for these investments are typically low, and professional money managers can help you identify the products that fit your goals and risk tolerance.

It’s important to consider when and how you can access your money, as well as the type of account that matches your age, timeline and risk appetite. You’ve got a few options to choose from. Here are some factors to think about.

Digital banking offerings

Your time is valuable, so the convenience of online banking is beneficial when choosing both your savings accounts and your bank as a whole. With just about everything these days going digital, make sure you can set up, manage, view and access your money online.

Risk tolerance

Timing is essential. Your risk tolerance will likely be higher in your 20s and 30s than when you’re closer to retirement. If you want to save for a short-term goal, it’s a good idea to consider high-interest savings accounts or investment products that aren’t locked in for an extended period. But if you’re saving for retirement or your children’s education, mutual funds that lock in your money for a longer term may offer better returns.

Fees

Ensure your bank offers savings options and accounts without sneaky fees that add up over time.

As a new Canadian, enough moving pieces are keeping you busy. Automatically saving each month simplifies your life. With a plan in place, you can grow your wealth, reach your goals and gain financial independence faster than you thought possible.