Financial Planning Basics for New Canadians – The importance of budgeting and cash flow management

When you’re new to Canada, getting a handle on your finances may be one of the top items on your to-do list.

Creating a budget may be the best place to start. Budgeting might help you see where your money is coming from and where it’s going, which may make it easier to find savings opportunities and may help you set financial goals for your life in Canada.

By planning your budget carefully you may be able to make the most of your money, keep track of your spending, and work towards a better managed financial future.

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Some reasons to build a budget

Achieving financial success in Canada is likely one of your goals – and with careful planning you may help make it a reality. By managing your money proactively, you may be able to achieve your financial goals.

Setting up a budget may bring you many benefits: more control over your finances, oversight to manage your debt, a way to curb overspending, and a clear plan to achieve both short-term and long-term financial goals. As you settle into your new life in Canada, a budget that you can stick to might also provide the confidence you need to potentially achieve your financial goals.

By budgeting you may potentially boost your credit score by better managing spending and avoiding penalties and late payments on credit cards and bills. Ultimately, this may positively impact your interest rates when applying for a loan or mortgage.^[1]

What elements you may want to include in your budget?

As you put together a budget, you may want to start by identifying and prioritizing your needs and wants, then set clear financial goals.^[1]  What are needs and wants?

• Needs might include the essentials for everyday life, such as rent or mortgage, utility bills, groceries, and transportation costs.
• Wants might include the optional extras that may bring pleasure but aren't necessary for daily living, like dining out, shopping sprees and entertainment activities.^[2]

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Defining your financial objectives, both for the near and long-term future, may be helpful in guiding your daily spending and reaching goals. For example, a short-term goal might be saving a certain amount each month, while a long-term goal might be purchasing your first home. These goals may help you make better financial decisions and keep you focused and on the target as you achieve milestones along the way. No matter how big or small your financial goals are, by thinking them through and budgeting around them, may help you be better equipped to meet all your financial targets.

Know how & where you are spending your money

Tracking where your money goes on an ongoing basis may be beneficial in managing your finances. Remember, every dollar you spend may affect how much money you have overall, and even small changes in how you spend might make a big difference in how much you save. TD MySpend might make it easier to keep an eye on your spending. It helps to sort your purchases into groups like things you need, things you want, and other categories that may be helpful. If you ever need to change a group, you can just tap the category symbol next to purchase in the Spent by Month, Spent by Category, or Transaction History views.

Give TD MySpend a try for a month or two. Use it to jot down all your purchases and bills. Then, group them into different categories. This may help you see exactly where your money is spent. Once you've done that, you may figure out where you might be able to make some changes.

Building your budget: some easy tips to consider

A monthly financial review that you can do yourself may be a good starting point. Simply take a look at what money you receive in your bank account each month, what you spend, and where you invest. This may help you see your big financial picture: what areas are doing well and where improvements may need to be made to your spending and saving habits. A budgeting sheet may also be helpful in putting all this information in one place, so you can see how much you spend and save each month.

Managing your spending and saving habits may be easier than you think. Tools such as the TD Cash Flow Calculator may assist you in keeping track of incoming and outgoing funds. The app can help make it easy and intuitive to find more opportunities to save money.^[3] It may also be a good idea to set limits on how much you spend to help stay within your budget. You may wish to set up automatic payments for bills and expenses, and consider limiting your online shopping and impulse purchases.^[4] Remember, TD MySpend may be a great tool to help track any purchases made through your TD savings, chequing, or credit card accounts as it may help you stay on top of your spending and saving goals.

Finally, you may wish to regularly track, monitor, and adjust your budget, as needed. Whatever tool you track it on, your budget is a living document that may need to be adjusted as your financial situation changes. A regular budget review and revision might be a good way to stay on course, and potentially towards achieving your financial goals in an ever-changing world.

Click here to learn more on building a budget in Canada.

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Why Choose TD?

150 years helping Canadians:

TD has a proud history of delivering financial solutions to Canadians for more than 150 years. TD also brings a century of experience helping newcomers navigate the unique challenges of the Canadian banking system.

With over a thousand branches, a reputation for excellence in financial services, and the ability to also serve you in more than 80 different languages, TD has become one of the largest and most trusted banks in Canada, now serving 16 million Canadians.

TD offers online support and resources of interest to newcomers on topics such as banking basics, moving to Canada, credit score essentials, and more. TD is open longer hours for your convenience and has thousands of ATMs across Canada to help you take care of your everyday banking needs quickly and easily.

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[1] https://www.canada.ca/en/financial-consumer-agency/services/make-budget.html

[2] https://www.td.com/ca/en/personal-banking/how-to/budgeting/budgeting-between-needs-wants

[3] https://tools.td.com/Cash-Flow-Calculator/

[4] https://www.td.com/ca/en/personal-banking/how-to/budgeting/make-a-budget