Back to School Money Lessons: Making The Most of a Bad Economy
August 27, 2012My friends are all posting their back-to-school photos of their kids and grandkids – they are so cute with their new clothes and backpacks! I miss the days of dropping my own kids off on those first days of the school year…well, except the first few years. I didn’t let them see a little tear in my eye as they walked into their classrooms looking so grown up.
I don’t miss the expenses however. It seems like no matter how well you shop for school supplies, clothes, and accessories, there was always a lot of money going out in August and September. The economy hasn’t helped either. This current recovery is the weakest recovery since WWII. But an interesting thing to note is there have been 10 recessions and recoveries since then. Do you think there might be one more in your lifetime? How many will your children see in theirs? These tough times can be used as financial teaching points for kids as well as a way for parents to be thrifty today.
Let’s look at some common money wasters and the subsequent lessons we can teach our kids:
Buying new sports equipment. I play golf in Park City, Utah and the season is about 7-8 weeks long so instead of buying a pull cart for my clubs, I just rent one at the clubhouse for $2 a game. I figure why pay $100 for a cart, especially when the season is so short. My son Brian was visiting a few weeks ago and he mentioned that I could pick up a used pull cart for about $29 at Play It Again Sports – they sell used equipment in great condition. His suggestion made sense since I’d break even in one season!
Parents can do the same thing. Used sporting goods stores have baseball gloves, cleats, soccer balls, and shin guards. You name it, they have it. A family with one child in three sports could easily save $200-$300 a year by going with used gear.
Lesson for the child – new is not necessarily better and used is almost always cheaper.
Splurging on smoothies and hot chocolate. A friend of mine’s daughter goes to Starbucks every weekday and brings her two little ones (both under the age of 5). She gets a latte and they each get a hot chocolate, which runs her about $9 a day and ends up being about $200 a month. I cringe when I hear about it — that is a college fund! My friend can’t understand it either but when my kids were little, I was guilty of taking them through plenty of drive-throughs for dinner when we could have eaten something simple at home. We also spent some time at Juice it Up! and Jamba Juice – which I can somewhat justify since smoothies have healthy ingredients and are sometimes more expensive to make at home. But either way, when times are tough, specialty drinks, fast food, and smoothies are a luxury so enjoy them with your children sporadically — not regularly.
Lesson for the child is to make wise choices with money and not waste it. You may be able to afford something; you just choose to save instead. You may splurge from time to time but not continually! (I bet they enjoy the hot chocolate much more too.)
Brand name clothing. When I was young, the popular brands of jeans were Jordache and Ditto, which of course this generation of young people has never heard of. Candi’s shoes has resurrected its brand but the others are now in some fashion museum. Was it the jeans I was buying? No. It was the elusive goal of “fitting in,” which is used brilliantly by marketers to our insecure tweens and teens who don’t know yet that everyone has frailties and insecurities. They think it is just them and the jeans will help (which they don’t, of course.)
Parents can refuse to buy brand names for their children and help them to find another way to fit in or learn to problem solve. The kids can shop at discount stores like TJ Maxx, where they can get a brand for the same price, or trendy discounter H&M. They can buy used either on consignment or (with parent’s help) on EBay or other resell sites. A friend of mine’s two daughters were very resourceful and bought one pair of designer jeans to share between the two of them. They made a deal they would each wear them two specific days of the week, giving the jeans a “rest day” in between. This strategy worked and it provided a plethora of wonderful life lessons for these smart young women (who happened to wear the same size.)
Cell phones and data plans. Recurring charges can really eat up a family’s budget. Cell phones are expensive themselves but the data plans for smart phones add up. A data plan can easily be $30 a month in itself.
Example:
Cost of adding an extra line: $15
Text package: $25
Data plan: $30
Monthly total: $70
From tween to senior in high school, the recurring cost of having a phone – not including the cost of the phone, is $5,040 per child. That is the cost of two years tuition and books at a community college!!
I know many parents want their children to have phones out of convenience for the parents and for safety reasons so they have become a “need versus a want.” I put off getting my son a phone as long as possible but when I was calling their friend’s phones regularly to reach my kids and offering parents five bucks to help with their cell phone plan, I knew it was time. But parents can be ruthless about the type of phone and limit the data plan. Do we really want to spend $5000 so your kid can play angry birds?
A car. There is a powerful urge for 15 – 16 year olds to get a car. For many, it is all they think about because they want the freedom it brings with it. That freedom comes with a huge ticket price since the cost of the car is just the tip of the iceberg. In a previous blog, I wrote about 10 Things College Student’s Waste Money On and owning a car was one of the biggest ones. According to a calculator on Edmunds.com, the true cost to own a 2012 Ford Focus sedan for a 5 year period is not just the $16,500 price to buy the car, but about $37k to own operate it. (Click here for the calculator.) Unless you live nine miles out of town like I did when I was a kid, encourage your child to bike, walk, share rides, or borrow yours instead of buying a car. Five bucks to share gas is much cheaper than over $7k every year to own your own.
This is not the first recession our country has had and will definitely not be the last, but it may be the only one where you have an opportunity to set money lessons in stone in your family. Right now, it’s also important to strike when the iron is hot because frugal is “cool.” I can’t remember a time in recent history when this was so – coupons are the rage and discount stores are popular instead of being frowned upon. If there is no social stigma to being thrifty and in fact, the trait is held in esteem, it makes your job as a parent easier.