New Poll Says Newcomers Outpace Canadian-Born In Saving Their Money
TORONTO – When it comes to setting money aside, Chinese and South Asian newcomers to Canada place a much greater emphasis on savings than residents who were born in Canada, according to new research from RBC.
Half (50 per cent) of those who have lived in Canada for five years or less, say they save more than 10 per cent of their income, compared with 19 per cent of those born in Canada. Only two per cent of newcomers said they save less than one per cent of their income, whereas 28 per cent of those born in Canada make this claim. The research is based on poll respondents who reside in British Columbia or Ontario, two provinces that attract many newcomers.
“Newcomers have a healthy approach to saving, and regardless of income, seem to have a greater focus on putting money away,” says Christine Shisler, Director, Client Strategy, RBC. “While balancing a new life in Canada, newcomers place a priority on savings and financial planning – a solid start to their journey in a new country.”
According to the research, newcomers and those who are Canadian-born share common financial goals for the next five years, such as having enough money to cover daily expenses (77 per cent of newcomers, 75 per cent of Canadian-born) and saving for retirement (67 per cent and 59 per cent respectively). Both groups also aim to pay down non-mortgage debt (52 per cent versus 54 per cent).
While both prioritize saving money to cover daily expenses as a primary goal, the two groups differ when it comes to their financial behaviour:
Not only do newcomers save more of their income, they also have very different savings goals. Newcomers are more likely to place a priority on starting a small business (41 per cent) and education for their children (61 per cent) than Canadian-born respondents (9 per cent and 21 per cent respectively).
There are also marked differences around planning for the future:
• 54 per cent of newcomers are saving in the event of illness or death in the family (compared with 31 per cent of Canadian-born respondents)
• 51 per cent are saving for expenses related to aging parents (compared with 11 per cent of Canadian-born)
• 67 per cent are saving for retirement (compared with 59 per cent of Canadian-born)
“Newcomers have similar long-term goals as those born in Canada, but may have a different perspective or specific needs relating to settling in a new home country.,” said Shisler. “With a solid propensity to save, we want to ensure that Newcomers are taking advantage of the many Canadian resources and tools available to grow their savings and realize their financial goals more quickly.”
Regardless of whether you’re new to Canada or are familiar with the Canadian banking system, Shisler offers the following savings tips:
1. Understand your full financial picture: Sit down with a professional to take stock of all of your expenses and income to determine how much you can save each month. Take an objective look at your overall expenses and see how those compare to your income. It’s important to be realistic about the amount you can put away to ensure that you actually stick with your plan. Take advantage of online tools and calculators to help create a budget or visit a branch to speak with an RBC advisor.
2. Set your goals and understand the savings and investment vehicles to help you reach them: Think about your financial goals and what kind of savings and investments you’ll need to get there. A good financial plan should have a mix of short-term and long-term savings goals, matched with the savings/investment vehicle that is most appropriate for those goals. For instance, a high-interest savings account can support a short-term goal; a Tax-Free Savings Account (TFSA) can support both short- and long-term goals; a Registered Retirement Savings Plan (RRSP) can support long-term goals.
3. Make your savings automatic: One of the easiest ways to put money away is to put it on auto-pilot. For example, open a high-interest savings account and set up regular contributions that are directly withdrawn from your main banking account.
4. Re-evaluate: Review your financial plan at least once a year to ensure that you’re on track with your original plan. Be prepared to make adjustments if you encounter unexpected expenses or life changes.
|Priority||Already saved for or currently saving for||Priority||Already saved for or currently saving for|
|1||Having enough to cover daily expenses (53 per cent)||1||Having enough to cover daily expenses (45 per cent)|
|2||Buying a home (48 per cent)||2||Retirement (39 per cent)|
|3||Buying or leasing a car (40 per cent)||3||Paying down debts other than mortgage (30 per cent)|
|4||Children’s education (33 per cent)||4||A major purchase other than a home (trip, car etc.) (22 per cent)|
|5||Retirement (32 per cent)||5||Buying or leasing a car (19 per cent)|