The supposedly relaxing summer season is coming to an end and with it is a return to structured routines and school schedules.
With that comes change and one of those may include possibly upping the weekly allowance for your child.
There’s no fool-proof method but institutions – from the worlds of finance, psychology and even government – have weighed in on whether or not a child is entitled to a certain dollar amount as a way to introduce them to budgets and how to spend wisely.
It’s not an easy task, especially when you consider the debate on whether a child should be rewarded money for completing household tasks.
In a tip to parents, Sheila Walkington, co-founder of Money Coaches Canada (moneycoachescanada.ca), said: “giving your child an allowance is an opportunity to teach your child how to manage money from a very early age.”
She said an allowance will give an opportunity for children to save up their own money while putting a stop to children nagging their parents for cash.
I can remember a time when my parents would give my siblings and I $2 a week (back when there was still a two-dollar banknote), and as we grew older into our pre-teen years it gradually increased to $5 a week. This was in the early 1990s.
Soon after, as a teenager, we would still receive an allowance but if we wanted additional income, it was up to us to find odd jobs (like mowing my grandparents’ lawn). Otherwise, the only alternative was hoping for birthday money or the occasional $10 bill in a Christmas card from my grandmother living in Halifax.
Nowadays, smartphone apps such as RoosterMoney, FamZoo and Threejars are available to help parents digitize the allowance in order to teach children about the value of money.
These so-called “piggy bank” apps reinforce the consequences of spending. For example, the FamZoo app sends a text message reminding a child when they’ve made a purchase.
The federal government, through the Financial Consumer Agency of Canada, has a position on giving children a weekly allowance.
They are for it – although the agency says it’s not the amount that’s handed out or earned but how that money is managed and eventually spent.
It recommends giving the allowance in small change for younger children so they can divide the money into what they plan to “save, spend and share with others or charity.”
The dollar amount is a personal decision but it should start out small and increase with age. Some parents ask their peers how much they’re giving their kids as a way to gauge the “going rate,” so to speak, and that’s OK too.
As your child reaches his or her teenage years, the Financial Consumer Agency of Canada suggests cutting back how often they receive an allowance in a way to teach responsibility as money comes in and then goes out again.
“This forces your teens to manage money over a longer time period. This will help them learn to plan and make choices about how they spend their money,” says the agency, albeit causing some friction in the process.
And, at some point, the money train needs to pull into the station.
There’s no magical age or date when deciding to end a weekly, bi-weekly or monthly allowance for your child.
It could be when they start a part-time job or when they graduate from high school, and many young adults still need help with expenses during their post-secondary school years.
Whenever they are ready to fly on their own, it’s important they fully understand budgetary concepts and how to stay out of debt as much as possible.
Chris Shannon is the business reporter at the Cape Breton Post in Sydney, N.S. He can be reached via email at firstname.lastname@example.org or on Twitter @cbpost_chris.