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.
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.
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.
Housing costs in Canada are affected by a variety of factors. Here are a few examples.
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.
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:
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.
The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.
The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.
This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.
The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.
Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).