This time last month, many Long Beach parents were purchasing new supplies, clothes and maybe even tech. If the financial aftermath is still taking a toll on your mood, you aren’t alone: 52 percent of parents cite the cost of back-to-school shopping as their leading cause of stress during the back-to-school period. Fortunately, there are plenty of ways you can tackle the root of the problem by getting your finances in shape.
The first thing any fiscally responsible parent should do is gain a realistic picture of what it costs to send a child to school each year. Back-to-school costs are on the rise; and as students get older and certain costs fluctuate, you can’t expect to spend the same amount ever year. According to the National Retail Federation, back-to-school and college spending is expected to reach $68 billion this year, with families spending an average of $100 on school supplies alone. Factor in apparel, shoes and electronics, the average cost of sending a grade-school child to school this year can add up – especially when you have multiple children to consider.
The best way to tackle these costs is to set a budget. Consider budgeting as a great way to prepare for costs you might otherwise forget about including small costs that add up and bigger ones that might put a short-term dent in your monthly budget. Now that overcome the costs of sending your child back to school with a functioning backpack and shiny new shoes, you may have a better sense of other costs throughout the entire school year including special events and programs, field trips, afterschool sports, extracurricular gear and the holiday season. Budgeting early gives parents a better understanding of what funds they have and are willing to use so they can prioritize expenses accordingly.
When evaluating costs, consider whether they are large one-time expenses or periodic payments. You may be willing to buy your child the new tablet and smartphone, but consider what you’ll also be paying for internet and networking costs throughout the year. If your student is enrolling in a sports program outside of school, make sure to include the one-time cost of gear as well as the team membership and, if applicable, travel payments. Families should analyze their finances to determine which purchases are in the budget.
While you may only be preparing a budget for the upcoming school year, it’s always a good idea to have a longer term perspective when it comes to finances. Grade school can be expensive – the U.S. Department of Agriculture’s most recent annual “Cost of Raising a Child” report estimated that it takes $304,480 to raise a child born in 2013, and grade-school education accounts for 18 percent of this total cost. That cost could be even more if children attend private schools with higher tuition rates. Working with a financial advisor can help alleviate confusion when it comes to choosing the best loan or financing option for tuition payments.
Looking beyond grade-school, college may also be in your child’s future. Making long-term financial plans for children’s lives beyond grade-school can help get future university students on their feet at an exceptionally stressful time. When possible, parents should start a separate savings account or make investments early to build an education fund. Talk to your children early to get an idea of their hopes for the future and decide on best financial plan to achieve those goals.
John Shadden is a Financial Advisor with Morgan Stanley Wealth Management in Long Beach, CA. The information contained in this interview is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney, LLC, member SIPC.
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