Back to School Budgeting for Parents

Ben: Hello. Welcome to another Consolidated Credit Counselling webinar. We’re joined again by Executive Director Jeffrey Schwartz, who I’m going to guess has been through the back to school shopping ringer more than a few times. So, Jeff, thanks for joining me and lending us your expertise, both as a financial expert and a back to school shoppers.

 

Jeff: Ben, happy to be here. And you are right. Thanks for having me because I have a lot to say on this topic. There are some great tips out there to make this a little bit less of a painful experience.

 

Ben: OK, good. So today, let’s take a look at what we’re going to look at today. Today we’re going to take some time and talk about planning before we get to the “How do I save money?” part. Now, I know that saving money is an important part of this topic, but there are so many great websites and resources out there that are dedicated to saving money at this expensive time of year. There’s no way we can do them justice in the time we have today. I’m sure you’re all familiar with Google, Amazon, eBay, Kijiji, but you might not be so familiar with budgeting or spending plans. I’ll go out on a limb here today and say that planning is probably the most important part about what we’re going to talk about today. So Jeff, as both a parent and a financial counsellor, would you agree that planning is the first and most important step here?

 

Jeff: Yes, absolutely. Without a plan, it doesn’t matter how much you save. Credit card temptation, impulse buying, or compulsive spending can happen without a plan. If the kids come with you shopping and you don’t have a list, anything on the shelves for them is fair game. You know what that means – it’s going to be a battle of strength the whole way. Don’t leave the kids at home, but stick to the list. Planning for the shopping season is absolutely critical. There are so many resources out there to help you plan for it. So it’s best to take advantage of that and take the guesswork out of it, even before you leave the house. I’m thinking of school lists, backpacks that haven’t been emptied since June, and online comparison and coupons. All this is going to help you succeed.

 

Ben: Good. So, there are some great points there that are also going to lead us to the other points on the slide there. Don’t worry, we will be looking at a few proven strategies for saving money, but only after we’ve touched on planning for this expensive time of year. After that, we’re going to look at all the ways that we can use this time of year as an opportunity to teach our children some basic financial skills that they’re definitely going to need later in life. And then finally, we’ll have some time to take some frequently asked questions. For now, let’s turn things over to Jeff, and he can get us started with planning and setting your budget.

 

Jeff: Planning, I mean, this means making a budget. What do you have available to spend? You want to set a budget and keep that in mind. What do you need? And I mean, what do you need to spend so you can set those limits appropriately? Write that list down, use it as a checklist, no more, no less. A plan is going to help guide you and help you stay on target so you don’t have to overspend or buy things you don’t need. Planning is really important at this time of year because there are so many distractions that will tempt you to spend more.

 

Ben: Right. We’ll quickly look at some simple strategies to help you plan and budget for this back to school shopping. But they pretty much all start with creating that list. You know, what your kids will actually need – not all the stuff that they want, but the stuff they actually need, because in reality, they may not need everything that’s on their school list this year. So, for instance, according to a recent Angus Reid poll, the average Canadian family spent $883 per household on back to school shopping. In the example here, we’ll use that $883 of the total budgeted amount, and then we’re just going to subtract as we shop. Some simple grade school math here. Just be sure to keep the receipts. This is something that I’ve seen quite a bit with confusion. What to subtract, what not to subtract. For instance, if you go shopping at, say, a Walmart Supercentre, some of the things you buy might not be school-related. It could be groceries or something for your personal needs. But by keeping those receipts, you can select which items were school supplies, which ones were for back to school, what was used for electronics, and you can then subtract those from whatever the budgeted amount is. Now, I mean, it doesn’t have to be $833 – that’s just what we’re using as the average here.

 

Jeff: So, I think now would be a good time to bring up that old thing called “cash.” Yes, it’s still widely accepted. And it’s great for those people who might get carried away with credit or debit cards and lose track of spending entirely. In that case, you might want to use a cash budget. So, like in the last example, set a budgeted amount for each category, and then go and get the cash. Set it aside, just like the budget indicated, and subtract as you go. This is also a great chance for your kids to see exactly how fast that cash can disappear. As well, by using cash, once it’s gone, it’s gone. The physical nature of cash is a fantastic indicator. However, some will still prefer to use plastic. And if that’s the case, you need to exercise self-control. And a debit card is usually a better option in this particular situation. It’s the closest thing to cash, and once your account is empty, it’s empty.

 

Ben: Right, I like that idea. It’s a tangible piece of cash. You have it, it’s gone, that’s it. There’s no more. For some people, I can see cash really working. But if you’re like me, and cash doesn’t stick around in your wallet very long, you might want to start looking at your mobile or online banking features. If you’re as big a fan of mobile banking as I am, then you can track your spending almost in real-time. Again, sticking with one debit card or one credit card is also going to help keep things a little bit easier. But as all the transactions show up in that account almost instantly, you can then take your budget – in our case, $883 – and use your online or mobile banking information to subtract those transactions from your budgeted amount as you shop from store to store. So, it’s almost like real-live tracking. Now we’ll jump over to saving money, which is something Jeff can help us with.

 

Jeff: Good. So, now that you’ve got your plan together, you set a budget amount, you decide to use cash or one credit card or one debit card to keep track, you’re all ready to hit the store or the keyboard. The choice is yours, but in my experience, it seems that everyone waits until the last minute. Back to school deals start popping up in stores and online ads in late June. Yes, June. So pay attention, and you may want to shop early to avoid the crowds. If you’re a person who’s easily stressed out, then shopping early is a great way to avoid some of the stress when you go out to the shopping mall, and it will also give you ample time to make sure that everything is purchased and ready to go long before the first day of school. Remember, look for deals wherever you can – bargain bins in-store, coupons in the paper, and even online – this is all going to help on the bottom line.

 

Ben: Right, and that sounds like my mother in a nutshell. She hated shopping, she hated the crowds, so, pretty much her back to school shopping was finished by June. We all thought she was crazy, but when school day rolled around, she wasn’t stressed freaking out, worried about all the stuff that we’d need. If back to school shopping in June or July isn’t your thing, then maybe you’ll want to wait the week after school starts. That’s when things hit the clearance shelves and you’ll be able to take advantage of the biggest sales and bulk deals. Another advantage of shopping later is you can actually wait and see. Maybe all the stuff your kids are begging you for right now isn’t really needed. Your children might absolutely be sure that they need the newest, trendiest item. They have to have it for the first day of school, but by November, it’s stuffed in the back of a locker, or it’s in a closet never to be seen again. So, if shopping isn’t your thing in general, then maybe like Jeff said, it’s time to hit the keyboard and flex your Google muscles. Take advantage of the discounts and promo codes for back to school shopping, both at the major retailers, but also look at parenting groups on social media. There are listings on Kijiji or eBay. Often you can find unused items that other parents are trying to get rid marked even new with tags. They’re trying to sell them or give them away for free, so that’s a great way to save some money there. And be sure to look into free shipping or promotional offers like Amazon Prime Day. And yes, I know that Amazon Prime Day, Black Friday, Boxing Week – those don’t happen around the start of the school season, but they’re great times to find huge savings on supplies that could be saved for later in September when school starts.

 

Which brings us to our next couple of points about saving money. The first one is, back to school shopping is an annual event. It’s going to happen every year from kindergarten to grade 12, and then beyond. So, Jeff, you are the budgeting guru here and your experience with back to school shopping, so perhaps you can take us through this slide and just give us your take on how to save during this expensive time of year.

 

Jeff: OK, thanks Ben. This is an annual event, much like the holidays and March Break, which means that you have plenty of time to save for it. In budgeting jargon, ‘back to school expenses’ could be classified as both flexible and irregular. They could be flexible in the sense that one year, they will need new shoes or a backpack. Maybe even a big-ticket item like a laptop, and then next year they won’t need those more expensive items. So it’s going to vary from year to year. It’s also an irregular expense in that it’s not happening every month, but why not make it a monthly expense starting with your next paycheck? Start with squirreling away $30 or $40 a month and then by the time September rolls around, you’ll have a few hundred dollars to help with you and your school budget so you don’t have to go into debt. If your finances are a little tight, then look at using some of your regular income for this irregular expense. Something like your tax refund, or a bonus at work, or gift money. Something along those lines. And put it away and use it later instead of going out and buying that gift or whatever you think you want to treat yourself, put it away and make that your savings account for your back to school shopping.

 

You might also want to use those credit card points. Cash-back cards can be set up to put the cashback into a savings account. Loyalty points can be redeemed for gift cards. Remember, the key is to start now. Even if it’s just a small amount, it all helps.

 

Ben: Right, and we see that again, you know, with holiday budgeting, right? If you save a little bit every month, it makes it a little bit less of a burden when that time does roll around. Another thing we should mention, and we’ve kind of mentioned briefly, is creating an inventory of what you already have. What can be used from last year? Do they need a new backpack? Do they need a new lunch bag? Just because the lunch bag from last year isn’t plastered with all the characters from the newest Disney movie doesn’t mean it’s any less of a lunch bag. And my personal advice is, always go with Star Wars. It’s both stylish and a timeless option and it works for boys and girls of all ages. And like I mentioned before, parents have a habit of collecting way too much stuff. And then what do they do? They sell it or give it away. So perhaps you want to take a look at some of those options for buying used. Just because it’s used doesn’t mean it might not be brand new. And in that case, you could look at second-hand stores. That’s another great option for saving money.

 

The next thing we should talk about would be credit. How are you going to pay that credit card off? This could be a great time to earn some extra credit by using credit. But like I said, be sure to ask yourself, how are you going to pay that off? If you’ve budgeted, and you’ve saved, and you’ve stuck to your plan, then you should have no problem paying off the credit card balance. And that could be a great thing. It means you’re using rewards and credit for convenience, not necessity. So go ahead, use the rewards card or the cash-back credit card, and by paying it off on time, you’ll also be building good credit history as well as netting those points or cashback. But, what happens when you have trouble paying those credit cards off? Sometimes it seems like it happens every year in September, and then maybe again in January. Jeff, can you just enlighten us a little bit on what that could mean when you’re having difficulty paying off your credit card at these expensive times throughout the year?

 

Jeff: Facing difficult times because you’re having trouble paying your credit card bill isn’t something that sits well with anybody. Again, like Ben said, it’s not just back to school. It’s many different things. It’s any time, really, that you’re pulling your credit card out of your wallet, and the idea here is, stop. Take the credit card out of your wallet and remove that temptation. Using that card for back to school shopping just means that you’re going to go deeper into expensive debt. It also means you’re using credit for a necessity like Ben said. And that’s fine if you pay it off, but not so good if you’re carrying it from month to month. It’s time to get that debt under control and start reducing it. Remember, there is help out there for mounting debt and school supplies. Seek the guidance of a trusted financial advisor or non-profit credit counsellor, and they’re going to help you with some creative ideas, not only to save money, but to help you get out of that debt.

 

Ben: Right, there is help out there, and it could be from a backpack or a school supply program, or school boards themselves, or the city or municipal government. There’s even non-profit organizations that run backpack and school supply drives. So they’re all willing to help, either by providing discounts on field trips, supplies for school, even some help with extracurricular activities, those types of things. Those are often based on income, so you have to look to the school board. So if you’re one of those families that might need a little bit of help, and if cash flow or debt are the issues, then maybe even before that, you want to take a look at your monthly budget. That’s always a great place to start. And if you don’t have a monthly budget, then now’s the time to start.

 

Jeff: Absolutely Ben. And you know, credit counsellors are also a great place to start. They do an excellent job of providing an assessment, which includes setting up a monthly budget, and that’s something that we as parents need to do, not just for back to school, but all the time. And some of the ideas around how you would get that help is, you might want to speak to a family member or friend in a similar situation and ask them for help and tips. A trusted financial professional you work with, perhaps through your financial institution or your bank, or an employee assistance provider can help. Work with them to clarify your situation. And of course, you can always speak to a non-profit credit counsellor absolutely free. A credit counsellor is going to help you develop that budget, then they’ll send you a snapshot of what that budget looks like, and then they’ll be able to help look for areas that you can save money. If debt is a concern, and it’s a big concern, don’t wait. It’s not just back to school. Contact a credit counsellor now, and they’re going to help you assess the situation and as well as find a way out of it.

 

Ben: Right, so help is out there. There’s more than one solution for different problems. So, you know, maybe just speaking to, like Jeff said, someone you know in a similar situation or a trusted financial advisor, or maybe you want to speak to one of our counsellors. Those are all great options.

 

Another thing to do that you might want to include is having the kids be part of the conversation when it comes to these budgeting and back to school shopping lists. As stressful and busy as this time of year can be, there are many opportunities to use this as a learning experience. Involve them in the budget for their school supplies and their clothing. That’s a great first step. They’re going to learn that, while they have unlimited and/or endless wants, the money available for those wants is finite. And that’s a great way to improve their decision-making skills. They’re going to have the opportunity to make a choice, but since the money is limited, they’ll also have to live with the consequences.

 

There’s seemingly an endless opportunity for financial activity when looking at back to school shopping, and I’m constantly hearing about these when I’m out doing these workshops or working with people in the community. And one of the favourite activities I’d heard of was a family, or parents come up with a way to have their kids find online coupons, printable coupons, promo codes for back to school shopping. And then if the mom uses those coupons when shopping, then she would give half of the value of the coupon back to the child on their next allowance. So for instance, their child found a $5 manufacturer’s coupon for pencil crayons. The mother used the coupon and then gave the kid an extra $2.50 on their next allowance. So they saved a bit of money, the product was a manufacturer’s coupon, so they purchased the pencil crayons on sale anyway, so they saved even more money. Other parents with older children have told me they were able to stay on budget by letting their kids know what they would match above and beyond the agreed budget. So for example, one high schooler was insisting he needed a new pair of Nike Air Force Ones. I think they’re like $120, but he was insistent that he needed those for the first day of school. So the dad said he would match his son’s savings. And if he really wanted those new Nikes for the first day of school, then he’d have to fork over the $60 that he’d saved from his allowance. Any experience or things like that you’d like to share that you’ve heard from other parents or your experience Jeff?

 

Jeff: You know, I’ve done this with my kids. Every step of the way from elementary school to university. And each time that I’ve done it has been a tremendous learning opportunity for both of us. Once they know there is some sort of potential benefit in it for them, they are all over it. And you know, it’s a similar life lesson that we all use. If we want something, we can usually have it, as long as we plan for it. The kids are better at this than we are. And this is a fantastic opportunity for a lesson for them.

 

Ben: Great. Well, in this case, it turns out the kid wasn’t the best at saving and he did wind up going to school the first day wearing his old Nike Air Force Ones from last year. But he did a really good job cleaning them. So maybe he made a smart financial decision after all. So those are some of the good first-hand tips from parents that I’ve heard. Jeff, you probably have some other tips that you’d like to share when it comes to involving your kids in the annual back to school shopping spree. Is there anything you want to share with us?

 

Jeff: You know Ben, it’s really quite simple and involves everything we’ve spoken about today. It’s almost like a reiteration of this. But the first thing is, make a plan. And that means what you need and what you have. Recycle and reuse. Scrounge around to see what you already have. There’s nothing like a bit of a windfall when you don’t have to go out and buy something. Because that’s money that you don’t have to spend, whether it’s on sale or not. Involve the kids. They are motivated, they are engaged, and quite frankly, they’re far more creative than we are. And lastly, whatever plan you do come up with, stick to it, because there’s all sorts of temptations outside of that. And whether it’s your child that’s dragging you in one direction or the latest and greatest that you have an interest in, if you stick to your plan, there’s going to be a lot less chance that you’re going further and deeper into debt.

 

Ben: For sure. I think if there’s one thing anyone takes home today, it’s that you need a plan for back to school shopping and any other sort of financial goals that you have.

 

So now we have some time to take some questions, and one that has come up quite a few times involves bringing the kids with you when you’re shopping. Jeff, seems like you and your family have some experience in this area. Would you care to field this one? What are your thoughts on bringing your kids with you shopping when you go for back to school supplies or clothing?

 

Jeff: You know, I happen to think it’s a great idea just because of all the learning opportunities that are available. But, you want to set the expectations and the budget well ahead of time before going out. Winging it around this time of year will end in arguments, disappointment, and overspending. Not the type of experience any parent wants. So, set yourself up for success in advance.

 

Ben: Great. So, onto the next one. Another question I hear quite regularly is, “How much should I expect my teenager to contribute regularly from his allowance or part-time job for a back to school shopping budget?” Well, I would say as much as he or she can, within reason, of course. I mean, it’s important to have the conversation. Just say, “Here’s what I, the parent, am willing to purchase, and really what I can afford, and then anything above and beyond that, they’ll have to fund with their own income. I still remember begging and pleading with my dad that I needed a MacBook for my first year in university. Even though he’s a born and raised Apple fanboy, he knew that $1,600 was way more than he could afford and probably more laptop than I needed. But he did know that I could get a working laptop for about $700 that could browse the internet and run Microsoft and watch YouTube videos just as well as the MacBook. Despite that, I saved $900 from my summer job and I used the $700 that he had saved and I bought it. I had it. So Jeff, anything you’d like to add in regards to having kids use their allowance or their part-time income for back to school shopping?

 

Jeff: I totally agree with this approach, and we’ve talked about it earlier in the webinar in that it teaches kids unbelievable decision-making skills. And we did the same thing in my house when my daughter wanted an Apple product. I said, “Yes you can have it, absolutely, but you’ve got to save for it.” And she did. And she saved for it and was so proud of it. And I also suspect that when you have more skin in the game, and perhaps with you as well, that that MacBook probably lasted far longer than it would have otherwise. And it was the same thing with my daughter and her Apple product. It was something that she treasured and I think it’s probably still around the house somewhere even though it was many years ago.

 

Ben: Yeah, you’re right there. I certainly got my money’s worth out of that laptop. I used it in some of my post-graduate classes, and in fact, we’re still using it. It’s kind of become the household jukebox, mp3 storage, I guess.

 

That looks like it’s all for today. Thanks again for listening, and hopefully you’ll have a better idea of how to handle back to school shopping season: this one, and the ones that are to come. And if you have any questions, please feel free to reach out to the counsellor at ConsolidatedCredit.ca email and we’d be happy to field any more questions. And if you or someone you know is need of some knowledge or financial education, or if you’re interested in learning how our wellness financial platform, KOFE, can help you or your organization combat financial stress, please contact me for a free demo. You can step into the credit dojo, learn the ways of the credit master, you can even chat with a financial coach, or sign up for a webinar. It can all be found at KOFETime.ca.

 

So Jeff, this will conclude the webinar, and thank you again for taking the time to speak with us, and I hope you have a great day.

 

Jeff: Pleasure, all the best.