Question 1

Should I use a TFSA or RRSP in Canada?

Accepted Answer

If you are earning under $50,000, a TFSA is often your best first step. You contribute after-tax dollars, and everything you earn grows tax-free. You can withdraw anytime without penalty. If you are earning over $50,000, an RRSP gives you an immediate tax deduction. You will pay tax when you withdraw in retirement, ideally when your income and tax rate is lower. Your situation matters most. Consider your income now, your timeline, and whether you might need the money before retirement.

Question 2

How do I buy my first home in Canada?

Accepted Answer

The First Home Savings Account (FHSA) lets you save up to $8,000 per year (lifetime max $40,000) tax-free for your first home. Contributions are tax-deductible, and withdrawals for a home purchase are tax-free. You can also use the Home Buyers Plan to withdraw up to $35,000 from your RRSP interest-free. You will need to repay it over 15 years. Start with the FHSA if you are eligible. It combines the best features of both TFSAs and RRSPs for home purchases.

Question 3

How should I pay down my debt in Canada?

Accepted Answer

List all your debts with their interest rates. Focus extra payments on the highest-rate debt first (usually credit cards at 19-21%) while making minimum payments on everything else. This is called the avalanche method and saves you the most money. Once that is paid off, roll that payment amount to the next highest rate. Keep the momentum going. Before aggressive debt paydown, build a small emergency fund ($1,000-$1,500). This prevents new debt when unexpected expenses come up.

Question 4

I just moved to Canada. How should I set up my banking?

Accepted Answer

Open a chequing account at a major bank (RBC, TD, Scotiabank, BMO, or CIBC) or consider online banks like Tangerine or EQ Bank for lower fees. You will need your passport, work permit, and proof of address. Next, apply for a secured credit card to start building Canadian credit history. Use it for small purchases and pay it off monthly. Once you have a SIN and are earning income, open a TFSA. It is flexible and tax-free, perfect while you are getting established.

Question 5

What should I do financially after having a baby in Canada?

Accepted Answer

First, apply for the Canada Child Benefit (CCB) right after your baby is born. It is tax-free and can provide up to $7,437 per year per child under 6. Next, open a Registered Education Savings Plan (RESP). The government matches 20% of your contributions up to $500/year through the Canada Education Savings Grant. Even $50/month adds up. Update your life insurance and will. If something happens to you, your child needs to be taken care of. Term life insurance is affordable for most parents.

Question 6

How do I handle my finances during a career transition in Canada?

Accepted Answer

Build a 3-6 month emergency fund before making the switch. This gives you breathing room if income is unstable at first. If you have an employer pension or group RRSP, understand your options. You can usually transfer it to a personal RRSP or locked-in account without tax consequences. Adjust your budget for lower income during the transition. Cut discretionary spending but maintain essential insurance coverage. Do not raid your TFSA or RRSP unless absolutely necessary.

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