For Parental Budgets, December Comes Twice a Year

If you have children attending school, be it kindergarten or college, back-to-school shopping can be a budget buster.

Financial planners Bethany and Scott Palmer (married, with kids) say most parents simply forget to build this into their estimate of annual household expenses. Instead, it seems to pop up mid-summer, resulting in an extra $500 to $1,000 on your credit card than you didnt plan for.

According to the National Retail Federation (NRF), this year Americans with kids in grades K-12 will spend almost $23 billion on clothing, electronics and school supplies. That works out to an average of $606.40 per family--about the same as last year. When you add in spending for college-age students, the total bill is projected to approach $69 billion, making back-to-school shopping the second biggest consumer spending event& behind the winter holidays.

Although the government declared that Great Recession II officially ended, it doesnt feel that way in the trenches, where the still-struggling economy and unemployment above 9%continue to batter family budgets. As you can see from the chart below, parents are coping in variety of ways. The top three: opting for things that are on sale, spending less overall and choosing generic or store brand products over more costly labels.

Scroll below to see how the economy is impacting back-to-school shopping this year.

The Palmers, who describe four money personalities in their book First Comes Love, Then Comes Money, say parents need to take a four-pronged approach if they want to prevent back-to-school shopping from getting out of hand. The imperative first step is to decide which parent is going to do the actual shopping. Right behind this is agreeing on the total amount you will lay out. If a Saver is married to a Spender, theyd better [agree] on how much money theyre going to spend, advises Bethany. If the spender does the buying, thats where problems arise.

The Palmers also suggest keeping school supplies on your radar screen throughout the year.

If you see it on sale, buy it in February, they say.

In the Palmers' household, much of the school shopping falls to Bethany, whom Scott says is better at it.

"She understands all the art projects. Im great with the jackets.

Still, Bethany, admits her own money personality--a combination of Spender + Risk-taker--makes her prone to overspending. Knowing this in advance and having a fixed budget helps keep her on-track when she walks into a store.

My defenses are up. Its not like a shopping spree. You cant do it quickly. Its going to take time.

Case in point: The Red Pencil with Eraser.

The Palmers' two boys, ages 8 and 10, attend a charter public school which requires parents to contribute a long list of classroom supplies that were typically provided--presumably by either the school district or my teachers--when I was in grade school:  paper towels, boxes of Kleenex, wet wipes, dry erase board markers, paper cups! In addition, each childs teacher sends an email about what each student must bring for his/her own use, specifying, among other things, the type of notebooks the child must have. The list for one of the Palmer's sons included: 1 red folder, 1 blue folder, 1 purple folder, 1 yellow folder, 1 green folder, and a red pencil with eraser.

As a Spender, Bethany knows her tendency is to always want the best.  But, in light of the budget she and Scott had agreed upon, when faced with what she describes as the $1.99 red-pencil-with-eraser or the 30-cent red-pencil-with-eraser, the voice in her head said, Bethany dont be stupid and she chose the latter.

Still, its not as simple as always choosing the cheaper item. Sometimes, spending more pays off in the long run. For instance, the Palmers buy the pants and shirts that their boys must wear to school at the uniform store instead of at a discount store because they know the clothes will last longer.

Taking your child to the store with you can be a challenge, but this another important element in the Palmers' Back-to-School Survival Guide.  Use the occasion to teach some valuable lessons about money. Our 8-year old totally gets it, says Bethany. She describes how she showed him one thermos for $18 and another for $14, saying, They look the same. They probably work the same. Which would you choose? (He picked the one for $14.)

Another approach is to give your child a limited range to choose from, such as, You can choose a backpack out of this group. Those others are too expensive. To help a child realize he or she can't have everything, you might suggest, If you want a Transformer backpack, were going with the really plain lunchbox.

This, of course, makes the shopping experience more time-consuming, especially if youve got several children. But it will pay off in the long run.

You want to teach your kids good money thought processes, says Bethany. If you cave now, youll have kids who are 25, still living at home and clubbing on the weekend.

Ms. Buckner is a Retirement and Financial Planning Specialist at Franklin Templeton Investments. The views expressed in this article are only those of Ms. Buckner or the individual commentator identified therein, and are not necessarily the views of Franklin Templeton Investments, which has not reviewed, and is not responsible for, the content. 

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