What Is the Cost of Living in Canada?

26 August 2021 by National Bank

Thinking about moving? Dreams of a new life aside, there are plenty of practical matters to think about, including the cost of living in Canada. How much money should you budget for? Here are some of the expenses you’ll need to keep in mind.

How much does housing cost in Canada?

Housing is likely to be one of your big-ticket expenses if you want to live in Canada. Costs vary considerably depending on the type of housing, where you live, and how much space you need.

1. Buying or renting—which is better?

Some newcomers prefer to rent for several years while they get acquainted with their new home—and with the Canadian real estate market. To determine whether renting or buying is the better option for you when you first arrive, it’s important to think carefully about your needs.

Buying a home can be a good option if you plan to stay in the same place for several years and have enough cash and sufficient income to cover both a down payment and your mortgage payments. In addition to the purchase price, you’ll also need to tack on 2% to 3% for additional expenses, such as a building inspection and notary fees.

2. Why is some housing more expensive?

Housing costs in Canada are affected by a variety of factors. Here are a few examples.

  • Demand: The higher the demand, the higher the prices. Central neighbourhoods tend to be seen as more desirable places to live, driving demand—and prices—higher. Housing is generally more expensive in the city than in outlying areas.
  • Unit size: The more rooms an apartment has, the more expensive it will be. The same goes for a house with a yard.
  • Amenities and services: There’s a good chance that a unit with a garage, parking space, or pool will cost more to rent or buy.

Apartment prices vary greatly from one city to the next. Overall, Vancouver is the city with the highest housing costs, followed by Toronto and Montreal. To get an idea about prices, check online ads or contact a real estate agency specializing in rentals.  To save money, keep in mind that prices tend to drop as you get further away from major urban centres.

3. What other costs are associated with housing?

The cost of rent or a mortgage isn’t the only housing-related expense you’ll need to consider. If you become a homeowner, you’ll have other annual costs to pay, including:

  • Electricity
  • Insurance
  • Municipal and school taxes
  • Condo fees, if you buy a condo

If you rent, some of these expenses (excluding insurance) may be included with your monthly rental. Whether you’re a tenant or homeowner, a good insurance policy can save you a lot of headaches if something goes wrong.

How much of your budget should you spend on groceries in Canada?

A typical family of two adults and two children spends an average of $13,907 per year on food, or about $267 per week, according to a study published by a group of Canadian academics. This doesn’t include restaurant meals. Obviously, food costs will vary with the choices you make as a consumer. Making a food budget is a good way to save.

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How much should you budget for clothing in Canada?

Clothing can be very affordable if you shop at thrift stores, or very expensive if you like to buy from high-end boutiques. It’s all a matter of choice.

Remember, Canada has four distinct seasons with significant temperature variations. You’ll need appropriate clothing for each season.

Winter wear requires special attention. Not only will you need a warm coat, but also a hat, gloves or mittens, a scarf, boots, and maybe even long underwear. It’s a good idea to set aside several hundred dollars in your budget if you need to buy all your winter clothes.

How much does it cost to get around in Canada?

1. How much does a car cost?

It’s entirely possible to live without a car in the city, but you’re likely to need a vehicle if you live outside of a major urban centre. If you’re thinking of buying a new car, you’re looking at over $10,000 at the very least, and potentially a great deal more depending on the make and model. Expect prices up to $25,000 for the smallest sport utility vehicles (SUVs), $60,000 for basic pickup trucks, and even more for luxury vehicles.

Another option is to lease. That way, you get to drive a new car with lower monthly payments. When the leasing agreement is up, however—usually after 3 to 5 years—you have to return the car to the dealer or purchase it.

You may also be able to save money by buying a used car. As used vehicles will always be cheaper than a new car, but you’ll want to make sure that the mechanics, body, and electronics are in good condition. A proper inspection can help you make a better choice.

And whatever you decide, don’t forget all the additional costs of vehicle ownership: gas, insurance, maintenance, driver’s licence, vehicle registration, parking permits, traffic tickets, and so on.

2. How much does public transit cost?

Canada’s best public transit systems are in the main urban centres. You’ll find interconnected bus, subway, and commuter train networks, along with bike and car-sharing systems in some cities. In smaller municipalities, you may have bus service, or no public transit at all.

Transit fares are typically $3 to $4. But there are all kinds of fare options that can save you money, including monthly passes (starting at about $90/month), multitrip cards, weekend passes, and more.

How much do cellphone plans cost in Canada?

Cellphone rates in Canada are among the highest in the world. Service providers offer a range of plans to meet your needs. To give you an idea, a basic smartphone plan with 2 GB of data can cost around $40/month.  Prices for more comprehensive plans can run $120/month or higher. And that’s not including the cost of your device.

How much does residential Internet cost in Canada?

And that’s not including the cost of your device.

Internet costs can also account for a big chunk of your budget. Expect to spend between $40 and $100 a month, depending on the package and connection speed.

How much does television cost in Canada?

As for cable or satellite TV, it’s usually available bundled with your residential Internet service. Costs range from $40 to $70 a month, depending on the package you choose.

How much do education, health care, and other public services cost in Canada?

Several decades ago, Canadians created a social system to provide universal access to health, education, and other public services. The sales and income taxes that Canadians pay are reinvested by government in hospitals, schools, roads, and other services.

1. How much do taxes cost in Canada?

The percentage you pay in sales tax on your purchases depends on the province you live in. The 5% federal goods and services tax (GST) applies in all provinces.

In some provinces, such as Ontario, for example, businesses charge a single tax known as the harmonized sales tax (HST), which ranges from 13% to 15% and includes the federal GST.

In other provinces like Quebec, there are two taxes shown on your bill, the provincial sales tax, which ranges from 6% to 9.975%, and the federal GST. The province of Alberta and Canada’s three territories don’t have a provincial sales tax. Keep in mind that sales taxes are hardly ever included in the prices shown on labels in store. They are added at the cash register when you pay for your purchases. Don’t be surprised to see that the amount you pay is higher than the price you saw displayed on products in store.

2. How much income tax do people pay in Canada?

Once again, each province has its own income tax system. The percentage of your income that goes to the provincial and federal governments depends on where you live.

Income tax is assessed using “tax brackets.” They more money you earn, the higher the percentage you pay in income tax. At the federal level, taxation rates range from 15% to 33%. At the provincial level, they range from 4% to 21%, depending on the province.

How much do banking services cost in Canada?

When you move to Canada, you’ll need an account at a financial institution where you can deposit your pay and do your transactions in Canadian dollars. You can open an account prior to your arrival. You’ll simply need to confirm your identity at a local branch once you get here.

Financial institutions may charge monthly fees, based on your banking needs. A standard monthly plan with unlimited transactions might cost around $15 a month.

Other plans with a limited number of transactions may be less expensive, and some institutions offer fee-free options if you maintain a minimum account balance.

Arrived in Canada less than 5 years ago?

Learn about our bank account offer for newcomers.

In a nutshell, it’s smart to plan for your arrival by finding out more about the cost of living in Canada. Once you have a better idea of what to expect, take time to draw up a detailed budget that will help you keep your finances on an even keel.  You may also want to check out our top tips for saving money.

Need a helping hand? Feel free to make an appointment with our specialists. They’ll be happy to assist you with your budget planning and provide savings and investment advice. If you have questions, we’re there to help.

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