Back-to-school so back to the bank?
September is around the corner and that means back-to-school shopping season is in full swing.
According to a RetailMeNot.ca 2016 survey, Canadian parents will spend an average of $472 per child for back-to-school shopping. That’s not trivial. The costs even become higher for older children at the university level – parents reported spending $1,630 per child, despite the fact that 64 per cent believed those in post-secondary education should financially support themselves.
Canadians continue to fund these shopping wants and needs largely on credit, credit that is not paid back in a timely manner. This means more liabilities pile up with the bank. The number of Canadians carrying a balance on a credit card rose to 20.4 million in the first three months of 2017. This is a 3.5% increase from the 19.7 million consumers carrying credit card balances in the first quarter of 2015, according to a TransUnion report.
Does your back-to-school shopping automatically mean going back to the bank for more credit?
If so, I’ll share some solutions for you today.
he Credit Counselling Society is concerned about Canadians, who are stretching themselves financially (no affiliation). They reached out to yours truly recently to help get the word out about how families can save some money with back-to-school shopping this fall. I got a chance to talk to Gary Tymoschuk, Vice President – Operations from the Credit Counselling Society about this very topic.
Gary, thanks for taking time to visit the blog and work with me on this subject.
My pleasure, Mark. Any time we get to help Canadians with their personal finances is well worth it.
Back-to-school on a budget. Like everything else, seems like a great concept. So where do families go wrong?
People end up buying on impulse, or not researching the marketplace (e.g., checking what the prices should be for items) – we all know that not every store or website will sell the same item for the same cost. And we can’t forget peer-pressure. Some kids will push their parents to make certain purchases because their friend has that style, type of clothing or school supply. Due to procrastination and putting things off until the last minute, some people may feel forced to buy the first thing they see.
So knowing these pitfalls, what can parents do better?
The first thing is to build a budget. Take time to research – know your prices and the marketplace in general; know what retailer might be the best place for lowest prices; and know where to shop (online, discount retailer or second hand/consignment store).
Second be determined to stick to your budget. Don’t allow yourself to waiver from it. If you go over on this item, you need to be under by the same amount on another item. Understand the difference between needs and wants.
Lastly, allow sufficient time to make the purchases, so you won’t have to make purchases on impulse.
Impulse seems to be a theme. Are there particular sites or resources more parents should be using to improve their money management practices?
I think so Mark. Here are a couple:
The FCAC (Financial Consumer Agency of Canada) This excellent site provides resources for Canadians at different stages of their lives, including having a family.
Consider MyMoneyCoach.ca. This is a free public online service provided by us (the Credit Counselling Society (CCS)). This site provides information, tools, live webinars and in-person workshops for Canadians. Canadian parents can take a budgeting workshop at their local library or join a webinar on budgeting. When it comes to personal finance, the basics are the basics and once they’re comfortable, parents can start to teach their kids about money. For example, in our “Raising Financially Fit Kids,” we talk about different lessons and concepts on how to teach kids at various ages.
Beyond parents improving their own financial literacy and behaviour, should parents take any time to talk to their children about money principles?
Absolutely! Parents should include children in discussions about finances to help them gain a greater understanding about money – there is no endless supply, but only so much of it. Children should be taught what a budget is, how to make one and then how to live within it. They should learn the difference between needs and wants. Children should also be taught how to shop for sales and specials, so they are able to see how far their money can go, in addition to getting more for their money.
Finally, what lessons learned should parents consider applying to next year’s back-to-school – so they don’t simply repeat bad habits?
Having a budget – all the time – is really the only way to ensure that both every day expenses and infrequent and/or irregular expenses like back-to-school, birthdays and Christmas can be well managed. This will prepare individuals for those expenditures when they come up and ultimately lessen the stress for everyone.
Closing thoughts…
When it comes to personal finance everything is personal but the basics are universal. Some boring money advice actually never goes out of style however I can appreciate saying you’re going to do something and actually doing it are very different things in life…
We’ve decided this is a better way to budget but your approach might be different – so I encourage you to find what works for you and stick with it. If you need some specific back-to-school shopping tips check out these articles Gary highlighted to me:
How to Balance Your Budget Needs with Wants
How to Get the Most Out of Your Back-to-School Budget
I want to thank Gary for his time and references today. I also want to wish you well in your pursuit of a better back-to-school budget.
What tips or tricks do you use to keep your budget in check? Share away. Thanks for reading.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
re: “University is now damn expensive. I remember when I went it was somewhat affordable…I can’t see that paradigm changing any time soon.”
The paradigm is cheap/free money aka student loans. When the gov’ts of Canada started giving out “free” money, the education businesses did the natural economic thing — started raising prices (ditto for real estate, stocks, and consumer goods). Cut out the government issued student loans and you’d see a precipitous drop in the cost of education. But, correct, our debt-addicted system will never allow that (what ever happened to “Do it for the children!”?). Those Scandinavian models are looking more and more attractive.
Another way to break the current paradigm is to seriously question if buying a degree is actually necessary or even worth it. There are always alternatives to the status quo, and both the parents and students need to seek these out (esp. for non-STEM degrees). It will also help lighten the financial load when more and more corporations start ignoring the “value” of degrees in the application & hiring process — focusing instead on actual life skills and accomplishments.
I’ve thought about this as well….even though I don’t have kids: “…seriously question if buying a degree is actually necessary or even worth it.”
If I had to do it over again, I would strongly consider a trade. Electrical specifically.
re: The costs even become higher for older children at the university level – parents reported spending $1,630 per child, despite the fact that 64 per cent believed those in post-secondary education should financially support themselves.”
This points out a glaring contradiction in the student loan system, mainly the ‘parental contribution’ calculation.
Why do “older children” aka ADULTS, who are legally responsible for their beings and actions and are afforded legal access to “adult” things — alcohol, driving, smoking, military enlistment, voting, taxation, firearms, etc. — still have to account for, and be tethered to, the income of his/her parent(s)?
Viewed from another perspective, divorced parents almost always have to pay child support, but only until said child turns 18, then payment obligations cease. Why would financial obligations initiate simply because a related person of legal age decides to pursue an education?
The gov’t criteria: “…the parents of dependent students are also expected to make a parental contribution. If you are considered to be an independent student, you (and your spouse, if you have one) are expected to contribute.
[list edited]
Generally, you are considered to be a dependent student if:
you are not married or were not living common-law for 12 months at the beginning of your study period;
you were not previously married or living common-law;
you are not widowed, divorced or separated or not a single parent with dependent children living with you;
you were not out of high school for at least four years prior to the start date of the study period;
you did not work for at least 12 months in a row on two or more occasions and were a full-time student during that time;
your parents are both alive or you have a legal guardian; or
you are not a permanent ward of a child and family services agency.”
I’m not sure what those 64% of parents are doing, but I suspect they aren’t doing much to change or challenge the system which gouges their belief system.
University is now damn expensive. I remember when I went it was somewhat affordable. My parents were great to help me with rent and tuition. In the first few years they helped with food as well. I needed to pay for my books and any “fun money”. I came out of university with $0 debt but I then went to college for a couple of years to get a diploma. That required OSAP. I dug a small hole for myself but found my way out of student debt by age 25.
Unless kids are working today, like I did in my 20s, and/or they have wealthy parents there is no way to afford a university education without going into major debt. So, for most kids seeking post-secondary education – it is absolutely back-to-school and bank to the bank this year.
I can’t see that paradigm changing any time soon. You?
Back to school cost is nothing comparing to summer camps. Every year I have maxed out my credit card just for that. Two kids for ten weeks, each week from 150 to 350 per kid. Not to mention most camp time is 9:00 – 3:00 and I had a big headache for managing the schedule every year. Canada is not a friendly country for working parents.
I’ve heard summer camps can be very expensive! I guess we could learn a few things from our European friends, re: vacation time!
Check out thrift stores! Great place for clothes and other back to school accessories.
Excellent idea!
Ahh back to school already, so sad because it signals the end of summer 🙁 I remember as a kid back to school always meant I got to choose a new backpack and a new pair of running shoes. And some new stationary. I wonder if that’s still the case for kids nowadays or are people scaling back? New pair of running shoes I understand since kids feet continually grow, but a new backpack probably isn’t necessary I suppose.
Hard to believe….I was talking with my neighbours about this stuff recently….a stressful time for them with kids; lots to organize, get ready for, etc.
I wonder if people are really scaling back. It doesn’t seem like it.