Financial Planning for South Asian Newcomers and Their Families
Starting a new life in Canada may bring many financial priorities. You may be planning for education, a vehicle, a home, a wedding or another important family need. At the same time, you may be helping relatives in Canada or abroad.
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With several goals competing for the same income, it may be helpful to make a plan before committing your money. Understanding the full cost, setting priorities and exploring your options may help you make decisions that work for you and your family.
1. Planning for major expenses in a new country
Start by listing your goals and when you expect to need the money. Some expenses, such as a vehicle for travelling to work, may be more immediate. Others, such as buying a home or paying for a child’s education, may be several years away.
Next, estimate the full cost of each goal. For example, the cost of a vehicle may include insurance, fuel, maintenance, parking and registration. A wedding budget may need to include clothing, travel, meals and celebrations in more than one country. Homeownership costs may extend beyond the purchase price to include property taxes, utilities, insurance and repairs.
Your family responsibilities may also be an important part of your financial plan. For some South Asian families, decisions about money may involve several generations. You may be saving for your children while also supporting parents or relatives. If you regularly send money abroad, include those transfers in your budget rather than treating them as unexpected expenses.
Discussing priorities as a family may help everyone understand what is possible and which goals should come first.
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If saving for your child’s post-secondary education is one of your family’s goals, and you are a Canadian resident for tax purposes, a Registered Education Savings Plan (RESP) may be worth exploring. An RESP is a registered account designed to help families save for a child’s education. Depending on eligibility, government incentives, such as the Canada Education Savings Grant (CESG), may provide additional funds for the plan
Interested in planning for your child’s education? Learn more about RESPs at TD.
2. How to pay for the education
Tuition is only one part of the cost of education. Your budget may also need to include textbooks, technology, student fees, transportation, housing, food and other living expenses. International students may have additional costs, such as health insurance or travel.
Once you have estimated the total cost, consider the different sources of funding that may be available. These could include:
- Personal or family savings
- Scholarships, grants and bursaries
- Funds from an RESP
- Government student aid, if eligible
- Income from part-time, summer or co-op work
- Contributions from parents or other family members
- Student loans or a student line of credit
Scholarships and bursaries may have different eligibility requirements and application deadlines. Researching them early may give you more time to prepare the required documents.
Family contributions may also be part of the plan. In some families, parents, grandparents or relatives may contribute together. It may help to discuss how much each person expects to provide and whether that support is a gift or money that will need to be repaid.
If there is still a funding gap, borrowing may be an option. Before making that decision, consider how much you may need, when repayment begins and whether the expected payments are likely to fit your future budget.
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Education may be an important family goal. Understanding the full cost and available funding options may help students and families plan together.
3. Saving for a large purchase
A specific goal may make saving feel more manageable. Decide how much you would like to save and when you expect to make the purchase. You may then divide the total amount by the number of weeks or months available to estimate how much to set aside regularly.
For example, if you want to save $6,000 over two years, you would need to put aside an average of $250 per month. If that amount does not fit your budget, you could extend the timeframe, adjust the goal or look for ways to reduce the cost.
Keeping the money in a separate savings account may make it easier to track your progress and avoid spending it on everyday purchases. Automatic transfers on payday may also help you save consistently.
Remember to allow for unexpected costs. Prices may change, family needs may arise or the purchase itself may cost more than expected. Leaving some room in your budget may reduce the need to borrow later.
4. Understanding your borrowing options
If savings will not cover the full expense, compare borrowing options carefully. Interest rates are important, but they are not the only cost to consider. Review any fees, the repayment period, whether the interest rate is fixed or variable and the total amount to be repaid.
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A lower monthly payment may appear more manageable, but a longer repayment period could increase the total interest paid. Looking at the overall cost may provide a clearer comparison than focusing only on the monthly payment.
Before taking on new debt, review your full budget. Include housing, food, transportation, childcare, and if applicable, family support, existing loan payments and regular transfers abroad. Consider whether you would still be able to make the payments if your income or expenses changed.
The borrowing amount offered to you may not be the same as the amount that comfortably fits your budget. Choosing a smaller purchase, saving for longer or making a larger down payment may be alternatives to consider.
5. Finding financial support in Canada
Canada’s banking system and financial products may be unfamiliar when you first arrive. Asking questions may help you understand your choices before making a commitment.
TD provides support in more than 80 languages. These include Hindi, Punjabi, Tamil and Urdu. Speaking with a banking professional in your preferred language may make it easier to discuss your goals, compare options and understand financial terms.
Eligible newcomers from India may also be able to begin opening a TD bank account before travelling to Canada and then visit a TD branch to activate it after arrival. Requirements and eligibility conditions apply.
Whether you are planning for education, a vehicle, a home or another family goal, consider reviewing the decision within the context of your complete financial picture.
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Sources
Government of Canada. “Education Funding.”
https://www.canada.ca/en/services/finance/educationfunding.html
Financial Consumer Agency of Canada. “Making a Budget.”
https://www.canada.ca/en/financial-consumer-agency/services/make-budget.html
TD Canada Trust. “Registered Education Savings Plan (RESP).”
https://www.td.com/ca/en/personal-banking/personal-investing/products/registered-plans/resp
TD Canada Trust. “New to Canada.”
https://www.td.com/ca/en/personal-banking/solutions/new-to-canada
TD Canada Trust. “New to Canada from India.”
https://www.td.com/ca/en/personal-banking/solutions/new-to-canada/marketing-in-india
TD Canada Trust. “TD New to Canada Banking Package.”
https://www.td.com/ca/en/personal-banking/products/banking-offers-for-newcomers
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