Hey there, time traveller! This article was published 24/8/2019 (354 days ago), so information in it may no longer be current.
Sure, minus-30 C was a shock to Cristina Licup and her husband Lee when they first came to Winnipeg about a decade ago.
But it wasn’t the biggest adjustment for the Filipino family who were drawn here seeking a better life for their kids.
"Actually, in the first while, I was doubting whether we made a good decision," says Licup, who adds the couple — as a requirement to immigrate to Canada — had to have significant savings.
Coming up with the money wasn’t an issue. The couple had good jobs in the Philippines. She worked in human resources and her husband in IT.
And yet here they were in a new country, finding themselves not just struggling to adjust to a new language, its wintery climate and a different culture. They also were experiencing financial culture shock.
"Our main concern (when we got here) was, ‘What if we run out of funds?’"
Their struggle was indeed steeped in the reality many newcomers face. Finding jobs in their respective fields was challenging because they had no Canadian experience.
"So we both decided to take whatever available jobs we could get," says Licup. "Immigrants like us call these ‘survival jobs.’"
What’s more, adjusting to the financial system was difficult. They quickly realized they had no credit history and needed to build one quickly if they wanted a credit card — practically must-have in our world. And then they had to get up to speed about all aspects of money in Canada that even naturally born Canucks struggle with, including filing their tax returns, investing for retirement, getting a mortgage and putting money aside for their children’s post-secondary education.
It’s a common challenge for newcomers. Most do persevere, but some really struggle, including Allan Par. A Filipino immigrant, he had been living in makeshift shack adjacent to Omand’s Creek, after arriving in Canada almost a decade ago. He returned to the Philippines after his story was published in the Free Press a couple of weeks ago. His tale illustrates just how the quest for a better life can be inverted for some newcomers.
Yet data from Statistics Canada show that although many newcomers do struggle financially at first, most eventually do quite well economically. In fact, over several years, immigrant families often build as much, if not more, wealth than Canadian-born families.
That’s not entirely surprising to Levi Labelle, assistant manager of the employment program at N.E.E.D.S. (Newcomers Employment and Education Development Services) Inc.
The government-funded non-profit works with newcomer youth, aged 8 to 29, and Labelle says, "they’re highly, highly motivated, and it’s incredible to see how they eventually thrive and find so many ways to become active members of our economy."
The Statistics Canada study published in May certainly backs up this assertion. It revealed recent immigrant families may have far less net wealth than Canadian-by-birth families, about $50,000 compared with $300,000. But those here more than 20 years have an average of more than $1 million in wealth, slightly ahead of naturally born Canadians between age 45 and 64.
By no means is the path to establish themselves financially an easy one — especially for refugees, Labelle says.
"With our clients, their financial resources are very, very limited," he says, adding privately sponsored refugees require a minimum of about $30,000 per person to cover their first year of costs.
And government sponsored refugees often must get by at first on social assistance with the assumption they will find work as soon as possible. Many do. In fact, a number work several ‘survival jobs’ to pay the bills and save for a variety of goals from retirement to buying a home.
While these financial milestones are hardly unique to Canada, our methods and means to achieve them can be quite different from other parts of the world.
Heck, even established newcomers from the U.S. may face a significant learning curve, says Darren Coleman, a certified financial planner and portfolio manager with Coleman Wealth, Raymond James in Toronto.
"We regularly get people who are eyeball deep in problems they didn’t even know would end up being problems for them."
He points to issues relating to estate planning, transferring registered retirement funds and income tax. For example, U.S.-born Canadians are still required to file a U.S. tax return even though they may work, live and pay taxes here.
"It can get very tangly." Coleman adds that’s why professional advice can prove indispensable.
Of course most of us need good advice when it comes to taxes because finding your way through Canada’s tax system labyrinth is very difficult for most Canadians, let alone newcomers," says Blair Evans, director of tax and estate planning at Investors Group in Winnipeg..
"The tax system is really complicated."
He adds it is often more complex than other nations, which may have flat income tax rather than Canada’s progressive regime, in which rates rise with income.
"This really just emphasizes" the importance of getting good advice, and "making sure you’re dealing with someone who is competent and very aware of some of these issues," Evans says.
Many new Canadians do seek out professional advice in large part because, contrary to popular belief, a large segment of newcomers arrive with significant assets, says Stephen Miao, senior vice-president and managing director at BMO Nesbitt Burns.
"But their experience varies," says the Toronto-based portfolio money manager.
"Some are sophisticated and others aren’t, but as new immigrants, they’re often all very cautious with their decisions."
Consequently many gravitate to term deposits, like GICs, at first. But as they become more familiar with the financial system, they might invest in Canadian blue chip stocks paying dividend income, he says.
Of course others have very little financial experience, including clients of N.E.E.D.S.
"That’s especially the case with youth who may have never even been inside a bank," Labelle says, explaining some have spent all of their lives in refugee camps.
"And so we do have to provide some very basic financial literacy for some of our clients."
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That does not, however, describe the experience of all newcomers, including Licup and her family.
Still she and her husband leaned heavily on the advice of others helping them adjust to their new lives. That community network is vital, yet Licup notes it can lead to challenges as well.
For example, she and her husband did not realize until after about a year they had other options for banking that offer more newcomer-friendly services than the financial institution they were with initially, which was the only option recommended to them.
Of course, all those early challenges are well behind the Licups. They’re fully adjusted to financial life in Canada. They have a mortgage, RRSPs and even RESPs for their children.
"For me it came down to hard work and perseverance," says Licup, who sometimes provides financial advice for newcomers at her blog momsiecle.com.
"At first it was hard for us… but we’re used to the life we live here now."
More about newcomer wealth growth in Canada
Statistics Canada research on the wealth of immigrants in Canada found that between 1999 and 2016 these households’ economic standing grew significantly. Yet the government agency also noted much of the growth was driven by rising home equity resulting from rising real estate values. Although real estate drove wealth growth among all Canadians, it made up a much larger percentage of immigrant family wealth. By contrast, Canadian-born families may have a great deal of their wealth tied up in their homes, but a larger share of their wealth was made up of retirement assets than immigrant families. As well, Statistics Canada noted immigrant families’ debt-to-asset ratios are “markedly higher” than Canadian-born families, which it suggests may be attributed to carrying larger mortgages.