Posthaste: Canadian parents can’t make up their minds about kids’ allowances

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Canadian parents can’t seem to make up their minds on whether to give their kids an allowance, or the appropriate amount to give, according to a recent report by money management app Mydoh.

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The study, which interviewed 700 adults with children aged six to 17, found that parents are divided on giving their kids an allowance, with 47 per cent having an allowance routine and 53 per cent opting out of allowance altogether.

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Parents’ top reasons for not giving their kids a regular allowance are necessity (56 per cent), age (28 per cent), cost (23 per cent), value (12 per cent) and logistics (five per cent).

Those who do give their kids an allowance have their own insecurities, with 22 per cent being unsure if they are using one effectively and 13 per cent not feeling confident about how much money they should give.

“Allowance is a safe way to teach kids about financial independence,” financial counsellor Jessica Moorhouse said in a press release. “Your child may impulsively spend a month’s worth of allowance at the candy store, but it’s a powerful opportunity to teach a lesson about saving.”

Ontario parents are the most generous with their allowance and pay their kids an average of $23.90 per week. In comparison, B.C. parents pay the least at an average of $17.80 per week.

B.C. parents also wait the longest to start giving an allowance and wait until their kids are almost 11 years old, on average. Parents in Saskatchewan and Manitoba, on the other hand, start offering an allowance two years earlier when their kids are close to nine years old.

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Canadian parents are also evenly split on whether withholding allowance is an effective tool for discipline. One expert says it’s not a good idea to limit access to money as a way to control behaviour because it can lead to negative feelings about money.

“This report highlights the uncertainty many Canadian parents feel around the role an allowance can play in building good financial habits,” Angelique de Montbrun, chief operating officer and chief marketing officer at Mydoh, said in the release. “Maybe we shouldn’t be surprised that one-in-four Canadian parents say it’s easier to talk to their kids about the ‘birds and the bees’ than it is to talk about money.”

She added that being inconsistent with an allowance is also a financial no-no. That’s bad news for nearly 40 per cent of parents who forget to give allowance regularly.

The majority of parents (81 per cent) still pay allowances with physical money and one reason for missed payments is that 26 per cent often don’t have the cash on hand to pay the week’s allowance. The report said that automating the allowance process can help create an effective routine for parents and kids in an increasingly cashless world.

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“While missing a week of allowance may seem inconsequential to you, it can lead to confusion and cause long-term negative associations for kids,” Moorhouse said.

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Alberta has been long viewed as a bastion of affordability — one of Canada’s last, particularly in recent years. But that narrative is facing an existential challenge, most glaringly in Calgary. Economists agree Calgary’s housing market is the hottest in the country. Vacancy rates are at historic lows and rents are projected to reach Toronto levels in a few years. As is the case across the country, people’s money isn’t going as far. Read on for more details.

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The first thing you might think about when you feel overwhelmed by debt and don’t know how to get rid of it is going bankrupt — and no one would fault you for thinking that. Bankruptcy is the word people know, and depending on their experience, going bankrupt is either a fresh start or a last resort for someone in financial trouble. But there are a lot of alternatives to bankruptcy in Canada that you should consider before committing to a legal process that’s extremely difficult to back out of should your situation change, writes credit counsellor Sandra Fry. Find out more.

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line at [email protected] with your contact info and the general gist of your problem and we’ll try to find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers led by Julie Cazzin or one of our columnists can give it a shot.

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Read them here.

Today’s Posthaste was written by Noella Ovid, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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