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Canadians should practice what they preach: nine in 10 say they manage their money well, yet personal savings rates have dropped into negative territory.

New MasterCard Canada program launched to help Canadian families manage their finances reveals that Canadian children receive nearly $2.5 billion a year in allowance.


Toronto, ON, October 17, 2005

Canadian families say they’re on top of managing their finances, but the facts tell a different story. A recent survey conducted by MasterCard Canada reveals that almost nine out of 10 Canadians feel comfortable managing their family’s day-to-day finances. Yet, recent Statistics Canada data shows the current personal savings rate, which is the difference between disposable income and what people spend, reached -0.6 per cent in 2005, sliding into negative territory for the first time since 1961. So while Canadians may be managing for today, they are not planning sufficiently for the future and are in need of a financial reality check.

To help Canadian families achieve solid financial health, MasterCard Canada, in conjunction with Credit Counselling Canada, today launched the MasterCard Family Finance Reality Check. The campaign includes an interactive quiz designed to help families assess their financial management strategies and a guide for Canadian families that provides basic money management rules, as well as advice on communicating about family finances.

"Canadian families need a reality check," says Laurie Campbell, spokesperson for Credit Counselling Canada. "While people think they’re managing their money well, they clearly aren’t. Canadians need to start the process of becoming solid financial managers by being honest with themselves and their families."


Budgets for everyone

Sixty per cent of survey respondents said they create and maintain a family budget. Of those, more than half (57 per cent) claim they stick to their budget "fairly well," while just 33 per cent stick to it "very well."

Interestingly, Canadian families in the average income bracket are more likely to create a budget than those in the highest income bracket: 67 per cent of those with a household income between $25,000 and $40,000 say they create and maintain a family budget, compared to only 50 per cent of families who earn $100,000 or more per year.

"Creating and sticking to a budget is the cornerstone of healthy financial planning, regardless of income level," says Campbell. "When creating a budget, Canadian families need to ensure that they have covered spending and savings, as well as short and long-term goals."


Money management should be shared and discussed

According to the survey, in 65 per cent of Canadian families one person manages all the household finances on their own, rather than it being a shared responsibility between spouses.

"While it’s smart for partners to maintain some financial independence in a relationship, adults should share responsibility when it comes to managing family finances," says Campbell. "If one person manages all the finances, there’s a danger that the family is not communicating regularly about money and is not working toward common financial goals. This can lead to misunderstandings and financial problems."


Money and your children – talk early, talk often

The MasterCard survey showed that on average, Canadian parents think it’s appropriate to discuss money management with their children at age 10. Nineteen per cent of the sample said that age 14 or older is an appropriate age to discuss money management.

The survey also showed that more than four in 10 parents (43 per cent) don’t give their children any allowance at all, and of the 55 per cent who do, the majority give it as a reward for chores, good deeds or so their children can buy things they want, rather than to teach children money management skills.

"Teaching children about money from the age they are first exposed to it (usually around age five) is crucial," said Campbell. "As soon as children come into contact with money, they need to understand its value, where it comes from and that there isn’t an endless supply of it. One of the best ways to teach money management skills is by having kids manage an allowance, which will help them develop smart spending and saving habits."

The MasterCard survey showed that 55 per cent of Canadian parents give children between the ages of five and 17 an allowance at an average amount of $16.00 per week. That means Canadian children receive a combined amount of nearly $46 million in allowance each week, or close to $2.5 billion a year! The amount varies according to age, with younger children receiving a smaller weekly allowance, and older children, who may have expenses such as transportation and lunches to pay for, receiving a larger amount.


Highlights of the MasterCard Canada Survey

Spending and budgeting

85 per cent of Canadian families say they take care with their spending:

  • 46 per cent say they plan and manage their spending carefully; another 39 per cent say they have a general idea of how they spend their money but may not have a formal plan.
  • Those in the Atlantic regions and those with higher incomes take particular care with their spending with 56 per cent saying they plan and manage spending carefully.

Almost 90 per cent feel comfortable managing their family’s day-to-day finances:

  • Close to half (48 per cent) of Canadians are "very comfortable" with it, with another 40 reporting they feel "somewhat comfortable".
  • Canadians in the west are more confident with their money management skills with 57 per cent of Albertans and 56 per cent of British Columbians saying they feel very comfortable managing their family’s day-to-day finances. By contrast, just 40 per cent in Quebeckers feel very comfortable.

Money management and children

Just half of parents discuss money management regularly with their children:

  • 28 per cent discuss money management on a weekly basis and 22 per cent do so monthly.
  • Eight per cent do so twice a year, four per cent once a year and 37 per cent never do.

On average, Canadian parents think 10 is the appropriate age to discuss money management with their children:

  • 23 per cent think it’s appropriate to discuss money management with this kids between the ages of five and seven; 28 per cent think between age eight and10 is appropriate; 20 per cent think between age 11 and13 is appropriate; and 19 per cent believe waiting until age 14 or older is an appropriate age to discuss money management.

55 per cent of parents give their children an allowance:

  • 38 per cent of parents believe allowance should be given to teach children money management skills.
  • 30 per cent of parents say the main reason to give a child an allowance is to reward them for good behavior or for completing chores.
  • 14 per cent say the main reason for allowance is so kids can buy things they want.

Tools and tips for taking control of your finances

MasterCard Canada and Credit Counselling Canada have teamed up to help educate Canadian families about financial management in their households by offering the following tools:


1)If Piggy Banks Could Talk – A guide for Canadian families
An educational tool that addresses basic money management rules and provides advice on communicating about family finances including goal setting, budgeting, saving and managing credit. The guide, produced with the help of the Credit Counselling Service of Toronto also offers families advice on how to communicate with and educate each other about family finances. Some tips include:

Money management basics

  • Set clear goals, from saving for a down payment to paying off debts.
  • Develop a monthly budget that covers spending and savings, as well as short and long-term goals.
  • Create a monthly spending diary and learning to track spending on a daily basis.

Communicating about money at home

  • Encourage adults in your home to talk to each other to determine financial goals, and then create a plan to stay healthy.
  • Talk to kids of all ages on a regular basis about money management skills appropriate for their age and developmental level.

To view the guide, please visit
http://www.mastercard.com/canada/education/family.


2)TheMasterCard Canada Family Finance Reality Check
MasterCard Canada is offering Canadians a free online interactive tool called the Family Finance Reality Check. This short, interactive quiz will give Canadians a sense of how well they manage their money, and offer advice on how to achieve financial health. Sample questions include:
  • Are you ever late with bill payments?
  • Do you ever borrow (i.e. from a line of credit) to pay bills (i.e. hydro or gas companies)?
  • Do you save for your financial future through RRSPs, RESPs and savings bonds?

To take the test, visit http://www.mastercard.com/canada/education/family.

About the MasterCard survey
This national survey of 1,000 Canadians 18 years of age and over was carried out by telephone between August 11 and August 16, 2005 by Environics Research Group on behalf of MasterCard Canada. Results are considered accurate to within plus or minus 3.1 per cent, 19 times out of 20.


About MasterCard Incorporated
MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members’ credit, deposit access, electronic cash, business-to-business and related payment programs. MasterCard manages a family of well-known, widely accepted payment card brands including MasterCard®, Maestro® and Cirrus® and serves financial institutions, consumers and businesses in over 210 countries and territories. The MasterCard award-winning Priceless® advertising campaign is now seen in 105 countries and in 48 languages, giving the MasterCard brand a truly global reach and scope. For more information go to www.mastercardinternational.com.


About Credit Counselling Canada
Credit Counselling Canada is a national association of not-for-profit credit counselling agencies and Orderly Payment of Debt programs from all across Canada. Credit Counselling Canada works to increase consumer awareness of the available assistance programs, and to develop a national standard in not-for-profit credit counselling. Credit Counselling Canada member agencies are community based and managed by professional staff. Credit Counselling Canada members help hundreds of thousands of Canadians to resolve their debt problems and learn to use money and credit wisely, every year.


About the Credit Counselling Service of Toronto
Canadian Counselling Service of Toronto is a not-for-profit charitable community service. It helps consumers by providing credit education, counselling on budgeting and wise use of credit, and planned debt liquidation programs. Its service reach extends across Canada, and involves the operation of 11 branch offices in Toronto, new network-enabled administrative capabilities, and an in-house Call Centre operation. Over the past 40 years, it has helped more than 500,000 individuals and families get through difficult financial times.

Laurie Campbell has been employed with the Credit Counselling Service of Toronto for 15 years, and has held the Program Manager position for 13 years. Laurie has a wealth of experience in the area of credit and debt management and is often called upon for her expertise by media, government and writers. She has co-authored a book called How Chuck Taylor Got What He Wanted, aimed at educating high school students on the proper use of credit and money management skills. Laurie was previously president of the Credit Association of Greater Toronto.


For more information, please contact:
Tina Gladstone: tgladstone@environicspr.com
Jill Rosenberg: jrosenberg@enviroinicspr.com
Catharine Marion: cmarion@environicspr.com
Environics Communications, 416-920-9000