Planner explains how parents can manage purse strings and find financial teaching opportunities
With a new school year just around the corner, families across Canada are going through the annual exercise of preparing their children for another year of formal education. And for many, it’s going to be an even bigger challenge than usual.
“On any given year, the back-to-school transition can be mentally and physically taxing – trying to find parking, going around to different stores, trying to figure out what your children want and what you can afford,” says Jackie Porter, financial planner at Carte Wealth Management. “But I think it’s definitely more stressful this year.”
According to a survey by PC Financial, almost one in two Canadians are more worried about their finances this year compared to a year ago. Parents are faced with rising costs on every front, Porter says, and the need to provide clothes, books, and electronics for their children adds up to a potentially large outlay of cash they may not have on hand.
School expense planning: not just a September affair
One simple reality of life is that people tend to avoid things they don’t enjoy. That rings loud and clear through another survey finding, which revealed Canadians would prefer to have a summer road trip than go back-to-school shopping.
“I think the big challenge is when you’re not sure what to do, you may procrastinate. And when you procrastinate and put things off until the last minute, you’re at greater risk of overspending – you’re likely to think ‘I’m just going to throw money at the problem,’” Porter says. “There’s a lot of research to show that you can overcome that feeling of wanting to put things off by creating a budget.”
In today’s digitally enabled society, there’s no shortage of tools and resources to help people make back-to-school spending plans. According to Porter, PC Financial offers an app that lets people build a budget and set limits on their spending ahead of time.
“I tend to encourage people to think about what all their expenses will look like throughout the year, including the summer and back-to-school, so it’s not something you’re just looking at when school’s about to start,” she says. “Keeping track of what they’ll have to spend on their kids means parents will have the whole year to prepare to finance those expenses, which is much less stressful than doing it in one season.”
Building a financial foundation
Parents can also create teachable moments by getting their children involved. By talking to their kids about back-to-school expenses, and engaging in discussions to separate wants from needs, parents can help ensure they have an emotional stake in money decisions and start building their financial foundations.
“As a parent, you can give them an understanding and appreciation of what things cost,” she says. “You want them to realize they’re not supported by an endless fountain of money, and they’ll have only a certain amount to work with. … At some point, they’ll be inheriting the purse strings, so why not set them up for success?”
For Canadians whose budgets are pinched, Porter encourages taking every possible to stretch their dollar further. Using points programs or rewards cards wisely for back-to-school necessities, she says, can help create room for other spending or saving opportunities. For some with multiple children, a hand-me-down scenario with a younger child reusing their older brother or sister’s clothes may also make sense.
After the drastic changes in interest rates and inflation over the past two years, Porter says more people than ever are anxious. For many, the fluctuating backdrop of affordability and borrowing costs has made it difficult to estimate the financial impact of going back to school, which means having a real-time picture of their finances and planning as much as possible is key.
“I always think of September as the start of a brand-new year for a lot of parents. They can get hit in the face with so many expenses that they might not have thought over in the last few months, so it can be jarring,” Porter says. “But it’s also a great time to revisit your budget and revisit your expenses, with an eye for how you can free up more cash for the things you need for the back-to-school season.”
