As I settle into my chair at the Gateway Community Centre in Ottawa’s west end, I’m struck by the mix of excitement and anxiety in the room. About thirty newcomers to Canada have gathered for a financial literacy workshop—part of my reporting on immigration and economic integration.
“The biggest shock? Banking fees,” says Amir Khosrowshahi, who arrived from Iran eight months ago. “In my country, many services are free. Here, I paid almost $200 in unexpected fees my first month.”
Amir’s experience isn’t unique. Canada welcomes nearly 500,000 permanent residents annually, according to Immigration, Refugees and Citizenship Canada, yet financial integration remains a significant hurdle for many.
Through interviews with settlement workers, financial advisors, and newcomers themselves, I’ve identified eight common financial missteps that can derail newcomers’ financial health—and more importantly, how to avoid them.
“Many newcomers are starting completely from scratch,” explains Mariam Chaoui, a financial advisor with New Canadians Financial Services in Toronto. “They’re navigating a system that operates differently than what they’re used to, often while learning a new language and seeking employment.”
The first major mistake is overlooking the importance of building a credit history. Without Canadian credit, newcomers face higher interest rates, security deposits, and limited access to housing and employment opportunities.
“I couldn’t get approved for a cell phone plan without putting down a $500 deposit,” says Elena Kowalski, who immigrated from Ukraine in 2022. “No one told me I needed to start building credit immediately.”
Financial experts recommend newcomers apply for secured credit cards, which require a deposit but report payment history to credit bureaus. Scotiabank’s StartRight Program and RBC’s Newcomer Advantage Program offer special credit card options for those without Canadian credit history.
The second mistake is keeping money in foreign accounts rather than transferring funds to Canadian institutions. While maintaining connections to home is important, keeping substantial assets overseas can complicate financial planning and tax filing.
“I left most of my savings in my home country’s bank,” says Miguel Santos, who came from Brazil in 2021. “I lost nearly 8% in currency exchange and transfer fees when I finally needed those funds for a down payment.”
Settlement agencies recommend newcomers open Canadian accounts promptly and explore cost-effective money transfer services like Wise or XE for bringing over larger sums.
Another significant error is delaying retirement planning. The 2021 Census shows immigrants comprise nearly one-quarter of Canada’s workforce, yet many don’t immediately take advantage of Registered Retirement Savings Plans (RRSPs) or Tax-Free Savings Accounts (TFSAs).
“I focused solely on establishing myself and sending money to family back home,” admits Priya Sharma, who came from India five years ago. “Now I realize I’ve missed out on significant tax advantages and employer matching contributions.”
Financial advisors suggest newcomers contribute even small amounts to registered accounts once they start working, especially if employers offer matching programs.
The fourth mistake is misunderstanding the Canadian tax system. Many newcomers are surprised by Canada’s self-reporting tax structure and miss valuable credits specifically designed for new residents.
“I didn’t file taxes my first year because I barely worked,” says Jonathan Okeke from Nigeria. “I didn’t know I could still qualify for benefits and refundable credits even with minimal income.”
The Canada Revenue Agency offers free tax clinics through the Community Volunteer Income Tax Program, while settlement agencies like YMCA Newcomer Services provide tax workshops tailored to immigrants’ needs.
Falling prey to predatory financial services ranks fifth on the list. Newcomers, especially those with limited English or French proficiency, sometimes engage with unregulated financial providers offering “special” services.
“A man in our community offered help getting a loan without a credit check,” explains Wei Chen, who arrived from China in 2020. “The interest rate was nearly 30%, and there were hidden fees everywhere.”
The Financial Consumer Agency of Canada recommends newcomers work only with regulated financial institutions and check advisor credentials through provincial securities commissions.
The sixth mistake is inadequate emergency savings. According to a 2022 survey by Payments Canada, newcomers are 1.5 times more likely to live paycheck-to-paycheck than Canadian-born residents.
“Everything costs more than expected when starting over,” says Fatima Al-Jabouri, a Syrian refugee who arrived in 2018. “When our car broke down, we had to use high-interest credit cards because we had no savings.”
Financial planners suggest newcomers aim to save three to six months of essential expenses before focusing on other financial goals.
Not understanding housing costs represents the seventh financial pitfall. Many newcomers underestimate the true cost of homeownership in Canada’s expensive housing markets.
“We rushed to buy because renting seemed expensive,” explains Carlos Mendoza from Colombia. “We didn’t factor in property taxes, maintenance, and utilities. Our monthly housing costs are nearly double what we budgeted.”
The Canada Mortgage and Housing Corporation offers free resources specifically for newcomer homebuyers, including calculators that show the full cost of ownership.
The final mistake is delaying the replacement of professional credentials. Nearly 50% of recent immigrants hold at least one university degree, yet many professionals face lengthy and expensive recertification processes.
“I was a practicing dentist for eight years,” says Dr. Amina Farah, who immigrated from Kenya. “I spent two years working minimum wage jobs before I could afford the certification process. I wish I’d started the paperwork before arriving.”
Services like World Education Services can pre-evaluate foreign credentials, while programs like Ontario Bridge Training provide financial support for recertification in regulated professions.
As the workshop at Gateway Community Centre wraps up, I notice participants exchanging contact information and resources. The financial challenges for newcomers are significant, but with proper guidance, they’re not insurmountable.
“Canada’s financial system has a learning curve,” financial advisor Chaoui tells the group. “But once you understand the rules, you can make them work in your favor.”
For the nearly half-million newcomers who will arrive in Canada this year, avoiding these common financial mistakes could mean the difference between merely surviving and truly thriving in their new home.
