Households with children in grade school and high school will spend almost $700 on back-to-school shopping this fall, according to the National Retail Federation. Clothing, electronics, and school supplies are the top three expenses listed by families in the Federation’s annual July survey. Households with a college student will spend closer to $1000 this year with the biggest expense being electronics.
“Interestingly, $1000 is about how much households spend on the winter holiday season too,” notes Peggy Olive, UW-Madison Financial Capability Specialist. “We tend to spend more time planning and year-round shopping for holidays, but back-to-school expenses often sneak up on us and present a surprise bill.”
The UW Division of Extension offers these tips to consider as households prepare for the start of a new school year:
First, go through school supplies and clothes from last year and list all of the items and clothes that you already have on hand. Does she really need a new backpack, or does he need that new lunchbox? Does the jacket from last year still fit?
Next, write down a list of items you absolutely must purchase. Use your child’s school supply list and your notes about clothes that need replacing. If a child is growing rapidly, it may make more sense to buy two pairs of jeans or khakis just to start the school year, rather than buying several pairs at one time. Waiting to buy a winter coat until later in fall and pre-season sales allows time for the child to grow and a chance to spread out some of the expenses.
Parents need to plan for fees paid directly to the school. Check school enrollment dates and fees, such as book rentals, band instrument rental, or athletic fees, and required immunizations. List these fixed costs in the “must have” category. If your family is in a difficult financial situation this fall, call your school district to find out about help with school supplies. Local community organizations often collect these and donate them for families. Free and reduced-price school lunches and breakfasts can ease the pressure on the family budget, and you can apply for these programs through your school district.
Get out your phone or calculator to come up with a total budget amount for supplies, fees, and clothing for each child in school. If the total amount needed is more than your household can afford, use your creativity to consider ways to stretch the budget. New clothes can be expensive, for example, so think about garage sales, friends or relatives with kids who are a little older than yours, as well as resale and thrift stores. Some communities hold back-to-school clothing exchanges too.
Parents can involve their children in the budgeting and shopping. Explain that there are many options available for buying the things they need. For example, a pair of jeans might cost $50 at a stylish chain store; $25 at a retail department store; $8 at a thrift or resale shop; and $3 at a garage sale. School notebooks cost from 50 cents to over $5.
Younger children will learn about how much things cost and how adults make spending decisions on a budget. Parents need to set spending limits on each category or item and then help children understand those limits. While shopping with younger children, you can look at folders and see that the one with the cartoon character on the front is $2, and others are 10 cents.
Talk about trade-offs in decision-making. If your child really wants the more expensive folders, then they will need to reuse their lunch box or backpack from last year.
Older kids can take your list of the things they need and come up with a line-item budget. A line-item budget lets them determine how much they will spend per item. Older kids will understand that if they buy six folders at 10 cents, as well other items at cheaper prices, they might have enough money left in their budget for brand-name sneakers. Learning to make decisions based on math skills, judgment, and personal taste is what money management is all about. Setting limits on spending doesn’t mean a lack of choices, but it does make kids have to think strategically.
If teens are using money they earned, remind them of how many hours they need to work to pay for the items they want to buy. If they are earning $7.50 per hour at their part-time job, they might take home about $4.50 per hour after taxes. It takes more than seven hours of work to be able to pay for a pair of $32 jeans.
Be careful about using credit. A credit card payment will mean cutting back spending for future monthly expenses. If you do use credit, figure out how much of a monthly payment you can afford in order to pay off the credit card balance as quickly as possible. If you need to reduce back-to-school spending this year, use the experience as an opportunity. Involving children and young adults in spending decisions can help your kids become wise consumers.
When this fall is taken care of, it’s not too early to begin thinking about next year. Parents and caregivers can look for opportunities to spread out purchases throughout the year. To come up with a household savings plan, use numbers from your budget this school year to estimate next year’s school-related expenses. If you spend about $300 per child, for example, then divide this by 12 to determine a savings goal of $25 per month per child. That nest egg will be great to have in the following school year.
Check out financial education resources from Extension at https://fyi.extension.wisc.edu/money/. For more information and educational resources on managing your family’s finances, contact the Extension Winnebago County office.
For more information, contact Extension Winnebago County Financial Educator, Todd Wenzel, at 920-232-1973, todd.wenzel@wisc.edu.
