The financial challenges of immigration

According to a recent study, a large majority of newcomers find living in Canada more expensive than they expected. In this vast and diverse country, the cost of living can vary greatly from one city or region to another. Listen to our expert talk about the steps and costs involved in relocating to Canada with peace of mind.

Ashleay: Welcome to the “In Your Interest!” podcast. My name is Ashleay and this week I’m joined by our colleague, Chief Strategist, Sébastien Mc Mahon. We’ll be talking about the financial challenges of immigration with the Education Specialist, Dave Yadav. Newcomers to Canada are often looking to improve quality of life for themselves and their families. Despite this, many challenges can arise along the way, including managing their finances. So, we’re going to talk with our guest about various topics related to the financial challenges of immigration, including the cost of living, credit scores, taxes and savings vehicles. So welcome, Dave, and thank you for joining us.

Dave: Well, thank you for having me. Just a quick little background about myself. I was actually born and raised here in Canada, and my dad came to Canada in the late 50s—1958—from India and my mum came from South Africa in the late 50s as well. Both of them had very different backgrounds and experiences, but they sort of shared some core values, such as a commitment to work, self-determination, they were really pro-education, and, having had very little support from their own government in their home country, they didn’t have the luxury of some of the more social types of benefits that we have and get to enjoy here in Canada. So for them, it was quite a different experience coming to Canada.

Ashleay: Right. And we often hear that it can be difficult for newcomers to find a job related to their field of study. How much of an issue is this?

Sébastien: Indeed, it’s a real issue. I recently read a study from Léger Marketing in the news, which reported that from over 2,000 newcomers in the country, only 59% of the respondents were able to find a job in their field of study or expertise. And yet, you know, we’ve been talking for years—and we’ve been discussing it on the podcast—about labour shortage issues in the country. You’d think that this would have helped things along, but there’s still a long way to go when it comes to recognizing qualifications and expertise. And there are a number of factors that can hinder a newcomer’s job search, such as, for example, a language barrier, in some cases; lack of Canadian work experience; not having a network of contacts is, of course, at play; and also, let’s say, differences in the hiring process. But how about you, Dave? What has been your experience or your parents experience through the years?

Dave: Sébastien, I completely agree with what you said. And I can add my dad’s experience to that. He came here with a very different idea of what Canada was all about. So, yes, he was a medical doctor, trained in India. But for him, getting something as simple as registration, he didn’t understand that process. In India, it’s a very different system. There was sort of a lack of understanding of the local cultural norms. For example, something as simple as, you know, how to dress—winter clothes, his footwear in India was very different from the type of boots that we wear during winters here.

 And then there was also some—I won’t use the word biases—but simply differences in understanding between various cultures. I always use something like hockey as an example. Right now, there’s a lot of talk about hockey. When he came to this country, he knew nothing about the sport. And from his perspective, he was more interested in other types of sporting events. So that’s a very simple example of what I would call a cross-cultural perspective.

Ashleay: And we can imagine that one of the first steps when arriving in a new country would be to open a bank account. How should newcomers go about this?

Dave: Well, there are two possible options. So, when my dad came to this country, he basically just came with some cash. There wasn’t really an opportunity for him to open up a bank account in India. At that time, Canadian banks weren’t available in his home village. But today, I have a lot of relatives who come to Canada and it’s very simple for them. All they really need is some official documents, such as a passport, some sort of work permit, study permit or visa that basically demonstrates that the Canadian government is aware of who this individual is and is sort of granting them immigration to enter Canada. And then once you have those documents you can simply either open up a bank account from abroad or come here. So, that’s the sort of process these days. But when he came to Canada, that process for establishing some sort of a banking relationship wasn’t available to him.

Sébastien: And something I’ve also heard from colleagues or ex-colleagues through the years is that it’s also a good idea to ask your chosen bank if it offers any special services for newcomers. Some may offer, for example, temporary fee reductions or even other benefits like some advising. So it’s worthwhile to ask.

Ashleay: Absolutely. And once you’ve opened a bank account, Dave, I’m assuming that a newcomer would need to build up a credit file to gain some purchasing power. How does that work?

Dave: Yeah, so that’s an interesting story, too. So, for generation’s my dad’s whole family had always paid for things in cash. So even building your home, you would actually pay cash to have that type of work done. But here, it’s pretty critical for you to have, for example, a credit card, which gives you access to open up a cell phone or get internet, all these things that we sort of take for granted today. But for him, understanding things like what a mortgage is, enrolling in an RRSP—those things were completely new for him. So he had to also understand the fact that he could actually deposit money in a financial institution, where he could later access it. His experience prior to immigrating was that most people just didn’t have large sums of money that they were able to store and accumulate for some future date. And that again goes back to this difference in how people are raised. So here we save for retirement, we live more independently, whereas in India—where he’s from—it’s a generational home where, you know, you have young children, adults and grandparents all living together in a sort of communal living situation, where you are expected to look after the next generation.

Ashleay: Right!

Dave: So very, very different.

Sébastien: Yeah. And the importance of having good credit in Canada is significant, because it will give you easier access to products and services, such as, for example, applying to get loans for various purchases, including a house or car, renting an apartment and taking out insurance. We underestimate the importance of having good credit in these everyday aspects of our lives.

Ashleay: Right. And when you arrive in Canada, it’s important to plan what your main expenses will be. And I imagine the cost of living can be difficult to anticipate.

Sébastien: Yeah, absolutely. Especially since the cost of living in Canada can vary considerably from city to city. I mean, it is a wide country and there are wide variations in the price of housing and goods and services. So, for example, the cost of living is much higher in big cities like Toronto, Montreal and Vancouver versus if you were, for example, to go to Quebec City, like where we are today. In the studies that I was referring to earlier, they pointed out that no less than 84% of respondents find that living in Canada is more expensive than they had thought before arriving in the country. So, almost everyone has that experience. And half of immigrants even described the difference as “significant.” So after arriving in the country, newcomers take an average of 20 months to become financially self-sufficient, mostly because of the difficulty of finding a job in their field of expertise.

Dave: Yes. So that’s very true for a lot of newcomers, especially students. Accommodation is the biggest cost for a lot of them. There’s also food: we, as Canadians, are well aware of the inflation taking place in the grocery stores. But many folks come here with very limited income, very limited savings. So accommodation, food… And then, the regular things like getting your cell phone set up, getting your internet set up, things like utilities, heat, all those sorts of things. And then, if you’re a student, things like trying to find student housing, trying to get your tuition paid for, trying to understand transportation, like a bus pass. Or, again, if you’re a newcomer wanting to live here, trying perhaps to purchase a car (we know that cars are also in short supply). And then day-to-day personal care, so things like healthcare, dental care, pharmaceutical care—all these things add up. So for a new Canadian coming here, a lot of those things are quite daunting.

I know, for example, speaking personally about my two children, sending them off to university was a big conversation. Well, you can imagine what it must have been like for young people like my dad—when he came here at 28 years old—who didn’t have the support that a lot of these new Canadians have today. When he came here, he had to figure out where to live, where to buy groceries—and even when he talks about buying groceries, a lot of the food that he was used to wasn’t available here in Canada. Trying to save for education for when my brother and I came along: there’s no registered educational savings plan available to folks in India. Things like transportation: buying a new car is a very daunting experience; he didn’t know how to do that. He ended up relying on a lot of his colleagues and  friends to help him work through those sorts of decisions. Things like health care, pharmaceutical care, dental care: these things are relatively available to Canadians today; but when my dad was growing up, they didn’t have social programs to help people look after themselves. So it was a very different system and his learning curve was very, very steep.

Ashleay: Absolutely. And another important consideration for a newcomer is how taxes work. Could you explain it to a newcomer?

Dave: Well, in Canada, income taxes are payable at both the federal and provincial levels. Tax rates are set in progressive increments. The more money you make, the higher your taxes. Federal tax rates are the same for all taxpayers in Canada. Provincial taxes, on the other hand, differ from province to province. Your total tax rate will therefore vary according to the province of residence.

Sébastien: Yeah, and I would add that you also need to know that in Canada we have to file income tax returns every year and no later than April 30th.

Ashleay: And no matter what country we live in, it’s always important to save for retirement. How could you describe Canada’s pension plan and retirement savings to newcomers?

Sébastien: Yeah, sure. So there are multiple saving vehicles available in Canada. Some are governmental, others are private. There are also savings and investment options. So, it may be worthwhile to first invest in a registered plan, which allows you to save money tax-free. Whether you’re a permanent resident, landed immigrant, foreign worker or student, these plans are available to you. Of course, this includes the RRSP for retirement saving, but you also have the tax-free savings account (or TFSA) and the Registered Education Savings Plan (or RESP).

Ashleay: And finally, are there any resources available to help newcomers integrate?

Dave: Certainly, there are many resources that can help them, for example, find a job, have their language skills assessed and enroll in language courses, find a house, apartment, those sorts of things, and help their children enroll in school. And then finally, there are all sorts of community service programs that are available to help new Canadians as well.

Sébastien: Yeah, I agree, there are many. And on the Government of Canada website in the Immigration and Citizenship section, you can simply enter your postal code, select the services you’re looking for and it will generate a complete list of nearby resources.

Ashleay: Well, that’s fantastic. Thank you Sébastien and thanks Dave for this truly relevant content. For those of you who would like to find more content for newcomers, head over to the Advice Zone on, where you can find several articles on subjects like finances, our health care system, insurance and many other interesting topics. See you all next week!

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Sébastien has nearly 20 years of experience in the public and private sectors. In addition to his roles as Chief Strategist and Senior Economist, he is an iAGAM portfolio manager and a member of the firm’s Asset Allocation Committee. All of these roles allow him to put his passion for numbers, words, and communication to good use. Sébastien also acts as iA Financial Group’s spokesperson and guest speaker on economic and financial matters. Before joining iA in 2013, he held various economic roles at the Autorité des marchés financiers, Desjardins, and the Québec ministry of finance. He completed a master’s degree and doctoral studies in economics at Laval University and is a CFA charterholder.

Sébastien Mc Mahon and Dave Yadav

This podcast should not be copied or reproduced. Opinions expressed in this podcast are based on actual market conditions and may change without prior warning. The aim is in no way to make investment recommendations. The forecasts given in this podcast do not guarantee returns and imply risks, uncertainty and assumptions. Although we are comfortable with these assumptions, there is no guarantee that they will be confirmed.

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2024-06-13 12:48 EDT
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