TD Bank survey says a large share of parents think they might not be setting a great example
One of the many things a parent can pass on to their children is the importance of managing their finances.
But many Canadian parents admit that they may not be setting a healthy example of how to manage money, risking a sizeable share of the next generation being uncertain about finances.
In a recent Ipsos survey for Toronto Dominion Bank, parents were asked about their financial habits and 1 in 3 were not confident they were passing on best practice to their kids.
Only 29% of respondents said that their household is in excellent or good financial health including the ability to pay bills on time, carry manageable debt, have savings, and a financial plan.
"Parents can be the biggest influence on their child's financial know-how, yet our survey shows many aren't sure about the kind of example they set for their kids when it comes to money management," says Jennifer Bishop, Head of Financial Health & Education at TD. "Asking for help when it comes to managing and talking about money can be an important step towards improving financial health. Speaking to a financial advisor can help a parent be better prepared to have the "money talk" with their children and support the development of healthy financial habits."
Bad habits
Setting a household budget may seem an obvious way to maintain financial security especially with the rising cost of living, but the survey found that 45% of respondents do not have one.
Additionally, a quarter of parents said they have no financial plan for the unexpected.
"If the pandemic has taught us anything, it's how important it is to have a household budget that includes setting aside funds for emergencies," says Bishop. "The unpredictability of the pandemic has shown us that it's important to plan for the unexpected. It is also a good opportunity to start the money conversation with our children, as it can foster healthy approaches to budgeting for parents and financial independence for children."
Only around one quarter of respondents said their children get an allowance for helping with household chores or good behaviour, despite this helping to give kids an understanding of budgeting and managing their own finances.
Talking to children about money is often triggered by the start of an allowance or a financial gift, but many parents believe that their kids are too young to learn about finances, will learn about money management in school, or that it’s a taboo topic (4% said so).
