Do you buy your kids new backpacks every September, when you know there are perfectly good backpacks piling up from previous years?
Is it a good use of your money to buy a new JanSport backpack, at a cost of approximately $50, every single year? Would your child be embarrassed to go to school with last year’s bag?
Whatever your motive, the bigger question really is, has this expense been budgeted for? It is easy to spend “just fifty here or there.” It may seem even easier to charge “just fifty here or there,” but here’s the thing: if you “just” keep spending your money, and there isn’t any plan, how do you know you are maximizing your money and using it wisely? And what are you teaching your child about money?
Of course, you want the best for your children and education may be one of your top money-spending priorities. I am asking you to take time and make an effort to be aware of your money and allocate where it is going. I want you to have actual goals you discuss with your child and make rational, well-thought decisions about how you are going to spend your money to meet your goals.
If you are the average American, you find yourself shelling out money throughout the school year for both expected and unexpected expenses. The costs of these expenses may or may not be within your means. Perhaps you charge some of these expenses, hoping the income between now and the due date will be sufficient to allow for payment of that charge?
The backpacks, of course, are part of the New School Year kick-off expenses.
You expect there to be a “supply list” from each teacher at the beginning of the school year. Of course beyond the initial list, there will be required purchases throughout the year. Consider also whether your child’s school will require a home or laptop computer, internet access and specific programs. If not this year, do you know when you will be expected to make such purchases and buy other big ticket items?
With schools continually facing budget cuts, if you don’t plan for it (and even if you do), you may be spending more money than you realize for your child’s K-12 education. To maximize your dollars and be prepared (these should not be considered emergency expenses), take some time to project the education-related expenses you will incur this school year. Consider the costs of both academic and extracurricular activities your child may be participating in this year. Are there unsubsidized costs of school clubs (ski, golf, horse-back riding) that you will be expected to fund? Your child may have costly opportunities outside of the normal expenses. For example, your child may be invited to “fly away” for a performance or game. Depending on your child’s age, you may also want to consider the costs involved in preparation for college including courses, applications and testing fees.
Will you be prepared throughout the school year to pay for these expenses as they arise? Will you be prepared to say no to some choices, so that you can say yes to others, and still live within your means? As long as you are thinking about these questions and planning, you are ahead of the curve, and moving in the right direction.
In my example of the annual backpack purchase, if you have an “education fund” as part of your budget, and you regularly fund that account and use it for these types of expenses, I am grinning ear to ear. But, if as you hear your child’s frequent refrain, “Mom, I forgot to tell you, I need money for school today,” you cringe, perhaps it is time to change things up and make a plan.
By having a plan it will quickly become clear whether these “never-ending” expenses are justified in your budget or if you must say no and set limits determining the extent of your child’s involvement. The costs associated with a starring role in the school musical may not be feasible in the same year as the basketball team. If you start this dialog with your child at a young age and together, with awareness, you choose which activities and expenses are aligned with your budget and goals, you can make unified, sound choices, stay out of debt and, hopefully, save for college and other long-term goals. Should you give your child more than you can afford today or is it more important to live (and teach your child to live) within the constraints of a budget?
The challenge to you is to prepare and live within your own personal School Expense Fund budget.
To determine the appropriate amount to budget, use the figure calculated for annual projected expenses (how much money you think you will need over the course of this school year), and add a bit more for the unexpected. Take that guesstimate number for total yearly expenses and divide it by 10. This will give you an estimate of how much you will need to fund each month over the course of the school year (10 months) and how much of your income to devote to depositing monthly into this account. For example, if after analyzing all of the envisioned annual expenses, you determine you will be spending $1,000, your goal would be to deposit $100 per month, regardless of the actual expenses incurred, into your School Expense Fund.
Once you determine the specified amount, commit to deducting that amount from your take-home paycheck and habitually fund your separate School Expense Fund account (this is not the college fund). If you can, start the account with a “starter balance.”
The most exciting part of this proposed School Expense Fund budget is that you are not going to do it yourself! If you accept this challenge, you are going to include your child in this account from its inception … today. Show your child the actions you are taking to grow the fund with your regular deposits and, of course, include him or her when you make withdrawals. When school expenses arise – from tri-fold poster boards to school trips – there will now be a fund to pay those expenses. Although the calculations are based on a 10-month calendar, the School Expense Fund is meant to be a continually growing fund. Should funds remain in the account come June, I am not suggesting a blowout party.
This budget exercise will help you manage school-related expenses, serve a priceless lesson in money management, and provide an ongoing bonding experience that you and your child will share for many years. It will instill in your child respect for money, an understanding of how money works and why it is necessary to budget. Your child will learn the importance of setting limits and striving to attain goals, while you provide a solid foundation for his or her successful lifetime of dealing with money and the impact of the money choices we make.
Teach your children well!
I’m a debt settlement and bankruptcy attorney who negotiates resolutions between clients and their creditors. I am also a real estate attorney involved in both sides of purchasing and selling distressed real property. I am passionate about teaching people about money and helping individuals of all ages achieve financial independence and success in a "no…
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