Most parents by now are in the midst of struggling to get their kids back into the school year routine. In addition to that stress are the added associated costs. New clothes, school and lunch supplies, as well as additional expenses for before- and after-school care and extracurricular activities can create some serious financial strain.
Most of us know that the best time to start preparing for the return to school was much earlier than we actually did. The same is true for preparing your budget for the additional costs it will have to bear for the next 10 months. If you find yourself among the majority that did not plan for this impending financial storm, here are five tips to help you keep your head above water.
Recognize the difference between needs and wants
Your kids want the latest hot trend in clothing, shoes and backpacks, but do they really need them? This is a battle that can start with kids at an early age as soon as they see something they want on television, online or in a store. If you’ve always given in to their desires, you may consider doing some retraining if you’re financially struggling to keep up with their wishes.
As soon as a child is school age, you can start educating them that their choices have financial consequences and that your budget has limitations. Even a child as young as five or six can understand the difference between getting one brand-name t-shirt for the same price as three store-brand shirts. A child a bit older can be given a set amount that they are allowed to spend to get all their back-to-school supplies. This is a great way to teach them to budget their money and make the hard choices themselves.
If this sounds too tedious, try shopping online together, but make sure you review their potential purchase, before finalizing, to ensure they included all their necessities and not just the fancy new backpack and light-up shoes.
Choose what is most important
Sometimes it’s not the children who are insisting on nice new clothes and supplies, but a parent who had to suffer through ill-fitting hand-me-downs and recycled school supplies. It’s OK to want better for our kids, but it should not come at the expense of being able to manage regular expenses or having to go into debt.
This is where a budget that includes allocating money to the things we value as well as necessities is important. It may also be necessary to cut back on things that are niceties, such as annual vacations or eating out, which may not be as important to us as giving our kids the back-to-school wardrobe we always wanted.
Balance convenience and costs
All those prepackaged lunch treats can significantly impact your grocery bill. I’ve heard from parents I provide debt counselling to that they “have to” buy those things for their kids’ lunches. Sure, prepackaged snacks, granola bars, cookies and even lunches are a time-saving convenience, but they come at a cost. Often these extra items can result in budget shortfalls due to overspending in the grocery aisles.
Instead, consider prepping meals with your kids on the weekend to help save costs. It also gives your children some control over what they have to eat. Nothing frustrated me more as a parent than finding a now-spoiled lunch uneaten at the bottom of a backpack. Children are more likely to eat what you send them if they are involved in the decision and the preparation.
Even if you aren’t Martha Stewart in the kitchen, it is good future adult training for your kids to learn how to follow a recipe and bake their own lunch treats. It’s better for your budgetary health to prepare your own lunches, and using fresh ingredients such as fruit, veggies and homemade cookies is more nutritious.
Weigh the costs of child care versus income
Child care can account for a significant portion of a family’s monthly expenses, so it is prudent to do a cost-benefit analysis to ensure that a parent working outside the home financially outweighs the cost of daycare. My husband and I once faced a possible $800-a-month daycare bill for our two boys, but we quickly calculated that by working opposite shifts, we could save $300 to $400 each month even with a cut in pay for one of us to work part time. At one point, we even “hired” our older child, after having completed the babysitting course, to watch the younger one for a significantly reduced cost.
In some cases, the increased costs of daycare cannot be avoided, so the family budget needs to be reworked to include it. Any time your financial situation changes, your budget should be reviewed and adjusted to ensure credit is not being used to supplement any shortfalls. The worst-case scenario is that a family may have to give up or reduce expenses such as vacations or eating out to fit in the necessary cost of childcare into the budget.
Understand the financial impact of extracurricular activities
Having children involved in sports, arts, music is a want, not a need, and should be ranked as such in the list of financial priorities. After covering housing, food, transportation, medical expenses and clothing, all other spending should be considered a nicety, not a necessity.
If it comes down to values and it is unequivocally important that your child be involved in activities, maybe choose just one. Get your child involved in choosing which activity is most important to them and help them understand that sacrifices may have to be made so that they can do it.
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A sport such as hockey can cost thousands of dollars each year and put well-meaning parents into debt. Mitigating some of the costs with fundraising and using birthday money for equipment, ice time and tournaments can also help your kids understand financial limitations.
If a child must choose between a new electronic item for their birthday or new skates, they may decide to take up a less expensive activity. School-sponsored sports are also much easier on the budget than those that aren’t.
It is possible to mitigate the effect of extracurricular activity costs and new school clothes by saving in advance for them. Add up all the expected costs for the year and divide them into smaller monthly or biweekly bites. Then, set up automatic transfers to a savings account coinciding with paydays to spread the budgetary impact out all year. This way, there is a monthly balancing of expenses rather than having to use credit to cover the deficit all at once.
The most important thing is to recognize, like all things in life, your budget has limitations and, in the famous lyrics by the Rolling Stones, “You can’t always get what you want.”
Sandra Fry is a Winnipeg-based credit counsellor at Credit Counselling Society, a non-profit organization that has helped Canadians manage debt for almost 25 years.
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