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The benefits of a monthly allowance for kids

Posted by on Feb 2, 2011 in Moneyville, Retirement | 0 comments

By Sheryl Smolkin

Read this article and comments at Moneyville.ca 

As a card-carrying member of the sandwich generation, I can attest to the fact that financially literate children are one of the best investments you can make in a comfortable retirement.

If you are lucky, your kids will help to take care of you and your money when age or infirmity makes it difficult for you to manage on your own.

Yet a survey released in January  by the Canadian Institute of Chartered Accountants reveals that although almost eight out of 10 Canadians parents have attempted to teach their children financial management skills, two-thirds believe they have not been very successful. How best to teach their children ranked as one of the most sought after financial literacy skills.

I think much of what my offspring learned about budgeting and saving came through osmosis and the school of hard knocks. But my husband and I did one thing that helped our children understand the value of a dollar at a young age.

Paying them weekly allowances was a real nuisance because I never had the right change. It was also very tempting to withhold the money for minor misdemeanours, which did little to promote family harmony.

So we started giving them monthly cheques instead. We opened accounts for them at the Royal Bank because they had a low-fee ATM in the convenience store at the end of our street. The kids also got their own bank cards so they could easily make deposits and withdrawals. The deal was that they had to pay with their own money for specific things like movies, school lunches and bus fare (in the case of my daughter who was older).

I knew it was working the day my son – who was 10 or 11 at the time – missed the school bus for the second or third time. Instead of expecting me or his Dad to bail him out, he called a taxi and had the driver stop by the ATM on the way so he could take out enough money to pay the fare.

I don’t remember though if he gave the driver a tip.I guess that was a lesson for another day.

 

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