How To: Save and Budget with Advice from CIBC

This blog has been produced in partnership with CIBC.

Are you finding it hard to save money since you arrived in Canada? You’re not alone! But with the right plan, you can take control of your finances.

Saving money is a challenge for many, but especially as a newcomer. Whether you are struggling to set aside funds for emergencies or trying to buy a home while working towards your dream job, it can sometimes be overwhelming to save money. When immediate expenses stop us from saving, stress, anxiety, and feelings of uncertainty take over. However, recognizing this stress is the first step towards overcoming it and achieving your financial goals.

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Savings

Savings can lead us towards a strong financial future where money isn’t an obstacle. While some companies in Canada may offer pensions or retirement funds, many don’t. Setting aside a portion of your paycheck each month and placing it into savings accounts or investment portfolios are just two examples of how you can start saving money right now.

Click here to learn about the CIBC eAdvantage Savings account.

These actions are small steps towards your dreams. And the most effective thing you can do for your savings is build a budget!

Build a Budget

When preparing for major purchases (like that much needed car to get around) and everyday spending (think about the groceries you get every week), the key is to plan! Personal budgets are a roadmap to achieve both short-term and long-term goals. By tracking income and expenses, you will see your own spending habits. Now, you can make more informed decisions about your savings because a budget helps you understand where you spend and where you may be able to spend less to save more.

Tips on Budgeting

1. Use budgeting tools like spreadsheets or apps to stay organized.
2. Track your income and expenses by updating your budget regularly. Try updating it every month with your purchases and adjust from there if anything doesn’t work for you.
3. Find the difference between needs (housing, groceries, transportation) and wants.
4. Set aside a portion of your income for savings, emergencies, and debt payments.
5. Seek out additional resources like workshops or financial counselling services for newcomers.
6. Regularly review and adjust your budget as your circumstances change, like when you land that dream job!
7. Consider placing whatever you didn’t spend into a high-interest savings account every month, so your money makes more money.

Click here to use the Newcomer Budget Calculator from CIBC.

Whether you’re starting a business in Canada, or pursuing more education, your savings are fuel for this change. However, for many, the journey towards financial security and realizing these dreams often involves significant investments such as purchasing a home. Understanding how mortgages work in Canada helps while navigating Canadian real estate markets as a potential home buyer in the country.

Mortgages

When exploring homeownership in Canada, understanding how mortgages work becomes critical. Typically, homebuyers start with a down payment, which is a small part of the property’s total cost. To bridge the gap, a mortgage steps in as a tool to help you. It is a loan, often large and over time, you will raise the funds needed to pay off your mortgage and fully own your home.

However, preparing for a mortgage in Canada demands planning. A critical step involves assessing your credit report. A good credit score can unlock favorable mortgage terms, while a low credit score may create new challenges. In this case, you may have to pay a higher down payment or accept a mortgage with elevated interest rates. Beyond credit, other considerations are looked at, with lenders reviewing your “financial health”. This includes your income, expenses, and any debts.

FAQs

1.  What is a mortgage? Simply put, a mortgage is a specific type of loan used to purchase a home.
2. What is fixed rate versus variable rate mortgages? Fixed Rate Mortgages are fixed payment plans that usually last around 5 years. Meanwhile, a variable mortgage rate is a prime rate that can increase and decrease over time. Be careful, the variable mortgage can often change without warning.
3. How can I prepare for better mortgage rates? Consider your credit score, any debt you have, and your income. Now, budget appropriately! When looking at home, only consider purchases with mortgages that are within your means. Then, you’ll know that your payments can be made on time every time.
4. Do I qualify for a mortgage? You can find out if you qualify for a mortgage by applying to a bank or other financial institutions.

Learn more about mortgages with insights from CIBC here.

Saving and understanding mortgages are crucial for your long-term financial stability in Canada and budgeting is key to managing money effectively. By tracking income and expenses, distinguishing needs from wants, and seeking resources for guidance, you can build a solid financial foundation for their future.

To read more about the types of bank accounts and banking services in Canada, click here.