While it still may be hot outside, autumn is just around the corner. This means for those of us with kiddos going back to school (or going back to school ourselves!), back-to-school shopping is upon us!
Back-to-school shopping is what we call a “periodic expense”. A periodic expense is an expected expense that doesn’t occur monthly. These periodic expenses can be budget busters if not planned for. Here are some common back-to-school budget busters, and how to avoid them:
Not Having a Plan
This can be the biggest budget buster of them all. Knowing ahead of time what you comfortably have available will help guide your shopping choices and make sure you don’t overspend. Sit down and make a list of everything you may need to buy and assign dollar amounts to each category. If you are prone to going over budget, consider using a cash envelope system to allocate your funds.
Buying on Credit
Many times, if a periodic expense occurs, the temptation (or necessity) can be to dip into credit to supplement income. However, when you buy on credit, you will end up paying more overall. This is especially true if you only make the minimum payments. Store layaway may be a better option. Just make sure to check if there are interest charges on the layaway, and if so, what they are.
To avoid having to use credit, we recommend a budget calendar for periodic expenses. Create a list of periodic expenses by month (back-to-school, insurance, medical, holidays). Add up the total amount of these periodic expenses, then divide by 12. This will tell you how much you need to put aside each month for these periodic expenses. This way, when those expenses come up, you will be ready to pay for them in cash and won’t need to rely on credit.
Before you go to the store, make sure to take an inventory of what you already have. It’s very possible there are leftover school supplies from last year that could easily be reused this year. Hand me downs can be spruced up with some patches or stickers to help give those old supplies new life. If you must buy new, try to buy durable items that can be reused for multiple years. You may pay slightly more up front, but it can help avoid having to re-buy the same supplies each year.
Buying Too Much, Too Early
Most schools send home a recommended supply list with students on the first day of school that has everything the students will need for that year. It may also include a “wish list” of optional items for the classroom. If you go out and get everything you think you will need in one big shopping trip before school starts, you may find that you have made unnecessary purchases or missed some items on the list. Wait until you receive the lists to do the bulk of your shopping to make sure you don’t overbuy.
This also goes for buying new school clothes. Unless there is a required school uniform, consider making a smaller trip for a few things first. Then your children can see what the trends are before buying the rest of the clothes for the year. This will help to eliminate unnecessary buys by reducing the amount of clothes you may buy that your children will never wear.
If you would like help creating a budget that can accommodate periodic expenses, or if debt is getting in your way, please feel free to contact us for a free financial review.