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Back to School Spending and Saving

August 2019

The end of summer means the beginning of another school year. Your family might be buying school supplies, sports equipment, or new clothes. You may even be outfitting a dorm room or apartment. Parents know that these expenses can add up quickly. The Huntington Backpack Index estimated that in 2018, the average back-to-school costs for an elementary school child was $637. Costs were even higher for middle school and high school students! You can cut costs by taking advantage of back-to-school specials. Many
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states also offer sales tax holiday shopping days. Budgeting for big expenses like this can help prevent financial challenges down the road. And with these costs, back-to-school shopping can be a good opportunity to talk to kids about budgeting—and saving! For example, if a new backpack costs $75 and they have $50 saved from allowance, are they willing to give up pizza night with their friends for the other $25? Or do extra chores to earn more? Look into some games and activities that your family can do together to learn about budgeting. Some students may have saved up cash from a summer job. Before they head back to class, talk about what they can do with their savings, and why saving is important. A “rainy day fund” can help a family get through a difficult time and feel prepared for an emergency. Yet around 40 percent of Americans say they do not have $400 to cover an emergency expense. Not having cash on hand after a disaster can be stressful and make recovery very difficult. Encourage saving early. Introducing the concepts of budgeting and saving up “just in case” can help build strong financial habits. Younger children can put some allowance into an emergency piggy bank. Older kids and teens may even want to start their own savings account at a bank or credit union. Savings accounts for kids under 18 typically give a parent joint ownership, so you can help manage the account. Look for a bank that does not require a minimum balance and does not have monthly fees. Ask about interest rates, too. Many schools also host school-based savings programs for students. These programs may be for students in elementary to high school. They can help students develop saving habit and familiarity with financial services. College students may be on their own for the first time. While they can choose their own classes, they might not know much about managing their finances. If they don’t already have one, help them set up their first savings account. Older students are probably facing bigger financial decisions as well. Make sure they understand their student loans. Staying on top of loans can save thousands in the long run and help set students up for success. The Federal Deposit Insurance Corporation’s (FDIC) Learning Bank can also help parents, teachers, and students of all ages understand finances. It’s never too early (or too late) to learn good financial habits! This article first appeared in the monthly Individual and Community Preparedness Newsletter. Subscribe here.