Banking, Budgeting and Taxes
Opening Bank Account

You should open a bank account soon after you arrive in Canada. You will need a Social Insurance Number and some other kind of identification such as a passport or your Permanent Resident Card. You may also need something that proves where you live, such as a telephone bill or a driver’s license. There are many different types of bank accounts depending on your needs. Some will let you write cheques. Most will include a bank card. With a bank card, you can withdraw money from an automated teller machine (ATM). An ATM is a bank machine that is open 24 hours a day. You can also use a bank card to buy things at most stores, so that you don’t have to carry large amounts of cash. With many accounts, you can use the Internet to do your banking and pay bills. Click here for some of the major banks and where to find them in Fredericton


It may cost more to get started in Canada than you expected. Although Canadian salaries are relatively high, so are costs. A budget, which is a personal or family plan to manage your money, can help you plan your expenses until your next pay cheque. Careful budgeting will help you avoid borrowing money, which you will have to repay with interest. Preparing a Budget First, determine how much take-home pay you earn. This is the amount of your paycheque after taxes and other deductions. Then look at what you spend. The money you spend will fall into one of three general areas:

Taxes and other items that you must pay; Necessary expenses such as food, shelter, childcare, clothing and transportation; and Luxuries.

CLICK HERE for a Budget Worksheet you can use

How Much Is Your Take-Home Pay?

Your take-home pay is what you earn after you’ve paid such things as:

  • Income taxes
  • Canada Pension Plan or Quebec Pension Plan
  • Employment Insurance
  • Union dues
  • Contributions to a retirement or pension plan
  • Any other deductions from your monthly paycheque

Most employers are required to make deductions from your pay to cover these items. Depending on how much you earn, this could reduce your pay by as much as 25 to 35 percent of your total income. If you are self-employed, you are required to set aside about 30 percent of your income in a separate account. You must give this money to the government for taxes, employment insurance and pension contributions. You can find out more about what you have to do if you are self-employed by reading the Guide for Canadian Small Businesses. The important thing is to plan your budget based on your take-home pay, not your pay before taxes and deductions.

The Things You Need

There are certain things, such as food and a place to live, that you can’t do without. These are necessities. The most important of these are:

  • A place to live
  • Heating and utilities
  • Food
  • Clothing
  • Transportation

You can save on necessities by living in inexpensive housing, shopping for food carefully, buying second-hand clothing, or walking, riding a bicycle or taking a bus rather than a car or taxi, but you can’t live without them. You may find at first that necessities take up as much as two-thirds of your budget.

The Things You Want

The things you want, but don’t absolutely need, are known as luxuries. You may not have a lot of money left over for luxuries after you buy all the things you need. Most people can’t afford very many luxuries, and have to make careful choices about how they spend their money. For example, if you must set aside money for education or medical care, there will be less for items such as a car, gifts or long-distance phone calls.

Income Tax

Most employers will deduct federal and provincial taxes from your pay cheque. Each year between January 1. and April 31. every adult (18 years old and over) in Canada must file an income tax return for the previous calendar year. On your income tax return, you list your income, deductions and tax credits. If you paid too much tax, you will get money back. If you did not pay enough, you will have to pay more. For help and information on income tax please contact settlement staff at the Multicultural Association of Fredericton. By completing an income tax return, the federal government can determine if you qualify to receive the Child Tax Benefit and the Goods and Services Tax (GST) credit.