Navigating Canada’s financial ecosystem: Insights for refugee claimants

The reflections and insights shared in this post are for educational purposes only and do not constitute professional financial advice.

Relocating to Canada as a refugee means entering a new chapter. This experience includes learning and navigating an entirely different financial system. And the transition comes with unique challenges.

It is especially difficult when earning a modest income, which is often the case in the first few months or years of arriving. It doesn’t matter if you’re 25, 45, 55, or older.

Many of us come from places with fundamentally different financial systems, presenting distinctive challenges as well as opportunities that we must skillfully navigate.

Credit scores, for instance, may differ in their overall significance and usage in everyday life. Understanding these variances can be crucial for adapting our financial strategies effectively.

The reality of interrupted careers and restarting professional life can be daunting. There are systemic barriers in the workforce. And, for many refugees, orienting to the financial system in Canada is an uphill battle.

But within this challenge lies opportunity. With support, patience, knowledge, and intention, we can build long-term financial health and independence.

I am excited to use this space to share reflections and insights from my personal journey. I hope these reflections will serve as an inspiration and the promise of possibility.

The Financial reality many refugees face

No matter our age at arrival, many refugees face similar realities. We start jobs that don’t reflect our prior experience or qualifications. We start with lower incomes and often work part-time or contract jobs.

And, there is limited access to financial tools like unsecured credit cards—a common credit building facility.

This impacts our stability, making it harder to secure financial independence.

But understanding the system and cultivating financial wellness habits can shift the balance.

How I built my credit score as a refugee claimant in Canada

Within a few months of arriving, I tried to access a traditional or unsecured credit card. The bank advised me that I would only be approved for a secured credit card.

An unsecured credit card was not an option.

I had a non-existent credit history in Canada and I was not a permanent resident.

I decided to start with a secured credit card.

This meant I had to deposit a certain amount as collateral, which in my case was $700—what I could afford at the time without jeopardizing my other financial obligations.

I understood that this initial investment would allow me to build my credit score in the medium to long-term.

By doing so, I hoped to eventually transition to a more conventional credit card, which would offer greater benefits, opportunities, and flexibility.

Practicing good credit habits

I used my secured credit card carefully, never spending more than $70 monthly, and always repaid it in full. I was intentional about keeping my credit utilization rate well below the 30% margin recommended by industry experts.

This approach was about discipline: treating credit like I was borrowing money from my future self.

My mindset was: If I use my credit card to buy $70 worth of groceries today, I should pay the full $70 by the due date to avoid extra charges. Otherwise, my credit card’s high annual interest rate of 19.99% will start applying to the unpaid balance.

How credit interest adds up if you don’t pay in full

To put this in perspective, credit card interest is usually calculated monthly based on the annual rate divided by 12. So, 19.99% yearly interest breaks down to approximately 1.67% interest per month.

If I don’t pay off the $70 upon receiving my credit card statement and before the payment is due, after one month I would owe roughly:

70 x 1.0167 = $71.17

After two months, interest compounds, and the balance grows to approximately:

71.17 x 1.0167 = $72.36

If this continues, it could take several months to pay off the balance. The total amount paid could exceed $75-$80, depending on how long it takes to make the payment in full.

The example I shared shows why it can be helpful to pay credit card balances in full each month, rather than just making the minimum payment.

Carrying even small balances can quickly become costly, especially if new purchases continue to add up.

When you have modest resources, every dollar matters. The way I thought of it was that paying interest on groceries meant paying more for food I’ve already eaten. It’s a cycle that hurts the most when you’re trying to stretch your resources while building credit.

How I used my secured credit card to boost my credit score faster

After six months, I saved enough to request a limit increase on my secured credit card. I waited deliberately because too many applications in a short period of time would hurt my credit score.

Alternatively, I could have applied for an unsecured card by then because I was employed full time. But I knew I would only be offered a low limit. It was likely to be $1,000 or less. I already saved up more than that amount and wanted to fast-track my credit score growth.

This may not be an option for every refugee claimant. The path we choose must be determined by our individual circumstances. Starting early, staying curious, and learning from trusted sources can make a big difference.

Achieving an excellent credit score through patience and planning

Through steady and strategic financial planning, I carefully managed my credit.

About two+ years later, I achieved an 800+ credit score. Shortly thereafter, I convinced the bank to release the security deposit and convert my card to an unsecured one.

This steady approach built a solid credit history, opening doors to my financial future. It required short-term sacrifices. I missed out on potential investment returns or credit card rewards tied to higher spending amounts. However, the long-term gains were worth it.

I now have an excellent credit score and I can invest the security deposit recently released by the bank.

Adopting the right mindset for financial success in Canada

These insights, drawn from my own experience and research, may be useful for refugee claimants navigating Canada’s financial system:

Mindset. Think of using your credit card as borrowing from your future self. When each purchase aligns with your broader financial goals, it can help you stay intentional and aware of your spending habits. This kind of forward-thinking approach may be especially valuable when you’re in the early stages of building your credit profile in Canada. It can support responsible spending and encourage timely repayments, both of which contribute to a strong credit history.
Patience. Building credit takes time. Whether you’re 25 or 55, reaching a credit score above 700 or 800 is usually a gradual process, not a sprint. Over time, consistent on-time payments and keeping credit usage low are factors that can positively influence your score. These habits tend to make a difference in the medium to long term.
Plan strategically. Applying for several credit products in a short period can sometimes impact your credit score, so it’s something to be mindful of. Increasing the limit on a secured credit card—when possible—may help improve your credit utilization rate over time.
Prepaying large purchases. If you’re planning a large purchase on your credit card, one approach is to prepay the amount from your chequing account. This can help ensure the funds are already available, and it could maintain your low credit utilization, which is one factor that can affect your credit score.
Find trusted advice. Connect with mentors, community leaders, or friends familiar with refugee financial realities. Their experiences can offer valuable insights. Exploring different perspectives may help you discover solutions better suited to your unique situation.
Use tax refunds thoughtfully. Got a refund after your first tax filing? Some people use it to increase their secured credit card limit or start an emergency fund. Others put it toward a savings account like the TFSA, FHSA, or RRSP (depending on income) to help build their financial assets over time in Canada.
Treat every credit transaction like a promise you intended to keep. Pay…your…credit…card…bill…on…time…and…in…full. Doing so can show responsibility, help maintain a good credit score, and demonstrate discipline to your bank.
Consider practicing conscious spending. Be mindful of your purchases by evaluating your needs and wants. Developing a Conscious Spending Plan (see below) can help prioritize your financial goals.

What is conscious spending? A Budgeting approach that can help refugees

Several years ago I learned about Ramit Sethi’s approach to budgeting, which I continuously adapted to fit my circumstances. His experience is based on living in the U.S., but I found the plan to be very adaptable.

Ramit encourages people—regardless of income—to spend freely on what they love, while cutting costs ruthlessly on things they don’t care about or find value in.

Ramit Sethi’s conscious spending philosophy explained

This concept invites us to shift our mindset about money, promoting the idea that financial freedom doesn’t mean deprivation. Instead, it means prioritizing what genuinely brings joy and satisfaction into our lives.

So I spend money on things I truly enjoy without feeling bad, once the basics are covered.

His popular framework, called the Conscious Spending Plan, promotes a balanced approach to both saving and enjoying your income.

The key is knowing where your money goes and understanding that every dollar should serve a purpose. This awareness leads to more intentional spending that aligns with your goals.

The Conscious Spending Plan

His general recommendation is to split your income into four buckets:

Fixed costs
Investments
Savings
Guilt-free spending

Adapting Ramit Sethi’s budgeting approach for refugees in Canada

The percentages in the sample Conscious Spending Plan below are adapted from Ramit Sethi’s original recommendations.

He recommends 50%-60% for fixed costs, 10% for investments, 5%-10% for savings, and 20%-35% for guilt-free spending. However, given the systemic barriers many refugees face, following these guidelines in the early years can be challenging.

Sample conscious spending plan for a refugee living in Canada

Category	Percentage	What it Covers
Fixed costs	50%-75%	rent, utilities, internet, groceries, credit card payment, wellness, personal care, transportation, phone, sending money to family etc
Investments	10%-20%	Tax-free Savings Account, First Home Savings Account, Registered Retirement Savings Plan
Savings	5%-10%	Emergency fund, big purchases (including one-time or infrequent expenses)
Guilt-free spending	10%-20%	Dining out, entertainment, subscriptions, hobbies, gym, spa, books, clothes, donations…just about any expense that’s not fixed on a monthly basis that brings you joy when you indulge

This conscious spending plan is intended as a general illustration for educational purposes and does not constitute personalized financial advice. Individuals should seek advice from licensed financial professionals to assess their specific situations.

In the initial months or years after arriving, fixed costs of refugees can be extremely high proportionate to income. This is particularly true if living in the Greater Toronto Area or Greater Vancouver.

Even shared, ‘affordable’ or subsidized housing can account for 50% or more of monthly income.

Given this, I believe adapting Ramit’s plan by creating more flexible ranges for fixed costs and other categories can better reflect the financial realities many refugees face.

Every journey is unique: Customize the Conscious Spending Plan to meet your needs

The percentages in the sample Conscious Spending Plan aren’t fixed—they’re flexible and situational. At one point, fixed costs might take up 75% or more of your income; at another, they might be 50% or less.

The important thing is to try to allocate something to each bucket—even if it’s just 1% or 2% toward savings or investments, or 5% for guilt-free spending—until your income grows. Consistency in applying the approach is what matters most. As circumstances change, percentages can change too.

While I share insights from my own journey to offer a perspective, remember not to compare your journey to anyone else’s.

There are useful financial principles and practices out there—you may take what resonates with you and adapt them to fit your own journey.

How I customized the Conscious Spending Plan

I have always been a disciplined saver and tend to take an active role in managing my investments. In fact, sometimes I invest funds I allocate to guilt-free spending because investing brings me so much joy—thanks to my dad.

I made saving a top priority in my first year. I focused on building my emergency fund to cover expenses for 4-6 months. At the time, saving accounted for ~30% of my income.

I restricted my guilt-free spending to ~7% and I invested ~8%. My fixed costs accounted for ~55%. In the short-term, I focused on building my emergency fund before prioritizing investing.

Much later in my journey, I shifted my attention toward investments. I allocated significantly more to investing and drastically reduced saving, because my emergency fund was well established. I was also in a better financial position to increase my guilt-free spending allocation.

Financial independence: A Journey worth taking

There are many compounding systemic barriers that exist for refugees. And, restarting life after displacement in a new financial system can feel isolating and difficult. But remember:

Many of us share this journey and we can learn from each other, even as we challenge systemic barriers.

Consistent discipline, patience, and knowledge are strong currencies for us.

Together we can achieve financial independence, reclaim our dignity, autonomy, and freedom after displacement.

Supporting refugees through practical, system-level action

The journey toward financial wellness is deeply personal—and it’s also shaped by the systems around us. Each of us will walk our own path. But organizations, policymakers, and financial institutions play an important role in making that path more navigable.

As such, I am recommending some practical, actionable ideas that can help bridge the gap between intention and access for refugees:

Make credit access more refugee-friendly. Financial institutions can offer no-fee, low-limit unsecured credit cards. This can be beneficial for refugee claimants who are not permanent residents, have no Canadian credit history, and who often start with low incomes. A simple, accessible product like this can be a lifeline in the early stages of rebuilding life after displacement.
Create accessible financial tools. Refugees deserve banking products that are simple, transparent, and inclusive. More financial institutions can design no-fee chequing accounts, offer ethical and low cost remittance options, and create mobile apps in multiple languages.
Seed early saving and investing habits. Organizations and financial institutions can offer matched savings and investment incentives or small grants tied to RRSP, TFSA, or FHSA contributions. Even modest encouragement can help spark long-term financial habits.
Embed trauma-informed care in financial services. The government and/or financial institutions can train service providers to approach financial conversations with empathy and awareness of past trauma. Compassionate support can make a lasting difference in how people engage with money as we rebuild our lives.
Fund community-based financial mentorship. Many refugees learn best from others who’ve walked the same path. Organizations and financial institutions can support peer financial mentorship programs rooted in lived experience. This relational learning builds trust, confidence, and belonging.

An Invitation to engage in meaningful dialogue for collective growth

I encourage refugees and allies to open spaces for dialogue about financial health. Sharing our challenges, strategies, and successes builds collective wisdom.

Navigating financial systems and personal finances alone is hard. Together, through conversation and community, we can empower each other toward stability and freedom.