Parents have more questions than answers
about building kids' financial independence,
but
financial expert Jessica Moorhouse
says allowance acumen is as easy as ABC
TORONTO, May 9, 2024
/CNW/ - If there's one consistent message to take away from
Mydoh's Canadian Allowance Report, it's inconsistency.
Canadian parents can't seem to agree on much when it comes to
giving their kids' an allowance, including whether to give one at
all. Withholding allowance as a punishment approach and allowance
amounts are also divisive topics.
Mydoh, the money management app for kids and teens
powered by RBC, partnered with Ipsos to poll hundreds of Canadian
parents with children aged 6 to 17 about their family's allowance
habits.
Among the findings?
- 47 per cent of Canadian parents give their kids an allowance,
which means that for every Canadian family with an allowance
routine, another family is opting out of allowance altogether.
- Canadian parents are evenly split on whether withholding
allowance is an effective tool for discipline.
- B.C. parents pay their kids the least at an average of
$17.80/week, while Ontario parents are the most generous at
$23.90/week (an annual difference of
more than $300).
- B.C. parents also wait the longest to start paying an
allowance. On average, kids in that province start receiving an
allowance when they're almost 11 years old. Parents in Manitoba and Saskatchewan, on the other hand, start
offering allowance two years earlier at almost nine years of
age.
"We know parents want their kids to learn money management
skills, but this report highlights the uncertainty many Canadian
parents feel around the role an allowance can play in building good
financial habits," said Angelique de
Montbrun, chief operating officer and chief marketing
officer at Mydoh. "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."
In fact, almost a quarter of Canadian parents say they're unsure
if they're even using an allowance effectively. To help,
Mydoh has partnered with financial expert and accredited
Financial Counsellor Jessica Moorhouse to equip parents with three
simple allowance guidelines: the ABCs of allowance.
"First and foremost," says Moorhouse. "I think it's important to
make clear that, assuming it fits in your family's budget, an
allowance can be an incredibly important tool in teaching kids
healthy money skills. Giving a regular allowance can open up
powerful conversations about money and give kids low-risk ways to
build real-world experience with budgeting and money management.
But we need to approach giving an allowance with purpose."
Specifically, Moorhouse suggests:
Autonomy
Although 78 per cent of parents surveyed for
Mydoh's report say kids should be required to save a
specific percentage of their allowance (and 32 per cent say kids
should be required to put at least a percentage aside for charity),
Moorhouse cautions against parents making too many of the decisions
around how allowance is used or spent.
"Allowance is a safe way to teach kids about financial
independence," she explains. "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." The more parents
dictate what happens with their kids' allowance, the less kids have
an opportunity for active learning.
Buy-In
Key decisions like how much and how often to
give allowance should be made by each family based on their
individual financial situation and their child's needs. Once those
decisions are made, parents should ensure kids understand the rules
and guidelines.
Moorhouse encourages families to think of allowance as an
agreement, with kids having a say in how it works. "If a child has
a choice and is actively involved with the terms of their allowance
– even having the ability to opt-out if they want to – they're more
likely to feel engaged, leading to positive associations with money
in the long run."
One-in-four respondents to Mydoh's survey said although
their kids receive an allowance, there isn't a clear understanding
of what kids are responsible for buying themselves. Will you still
pay for a new pack of trading cards if your kids get an allowance?
What about a cool new pair of running shoes? Make sure kids know
what is and isn't expected of them financially and keep the
conversation going, using open-ended questions to get kids to talk
about their financial goals.
Consistency
Almost 40 per cent of parents who give
their kids allowance say they forget to give allowance regularly.
"While missing a week of allowance may seem inconsequential to you,
it can lead to confusion and cause long-term negative associations
for kids," says Moorhouse.
Similarly, withholding allowance as a form of punishment is a
financial no-no, according to Moorhouse. Limiting access to money
as a way to control behaviour can have negative effects on feelings
about money.
Automating the allowance process can help create simple, yet
effective routines for parents and kids. According to survey
results, 81 per cent of parents are still paying allowances with
physical money, but in an increasingly cashless world, it's
unsurprising that 26 per cent of parents say they often don't have
the cash on hand to pay the week's allowance.
Digital money management tools like Mydoh – which
recently went subscription-free – allow parents to set up automatic
allowance deposits or send money to kids as, and when, they need
it. Kids and teens can securely spend their allowance using an
age-appropriate, reloadable prepaid Visa card like the Mydoh
Smart Cash Card.
View the full version of Mydoh's Canadian Allowance Report
here.
Survey Methodology
These are some of the findings of
an Ipsos poll conducted between April 5 to
April 8, 2024, on behalf of Mydoh. For this survey, a
sample of n=700 parents ages 18+ with children ages 6 to 17 in
Canada were collected. Quotas and
weighting were employed to ensure that the sample's composition
reflects that of the Canadian population according to census
parameters. The precision of Ipsos online polls is measured using a
credibility interval. In this case, the poll is accurate to within
± 4.2 percentage points, 19 times out of 20, had all Canadian
parents aged 18+ with children ages 6 to 17 been polled. The
credibility interval will be wider among subsets of the population.
All sample surveys and polls may be subject to other sources of
error, including, but not limited to, coverage error, and
measurement error.
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About Mydoh
Since 2019, Mydoh has been
committed to helping parents raise money-smart youth. Mydoh
began with the shared belief that money management isn't something
you are taught, as much as something you learn through experience –
and that experience should start early. Mydoh has championed
this belief since its inception and with it, has been able to help
over 142,000 Canadians build a more solid financial foundation for
the next generation.
About RBCx
RBCx powers bold ideas, founders, and
technology companies. We know building great businesses takes more
than just finance, which is why our four pillars – Banking,
Capital, Platform, and Ventures – combine to make us the go-to
backer of Canadian innovation. We use our deep expertise to support
businesses of all sizes and stages, and leverage RBC's extensive
experience, networks, and capital to solve tomorrow's big
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SOURCE RBC