Financial considerations for back-to-school success: Tips for parents.

New York Life | August 8, 2024

As the summer days wane and the back-to-school season approaches, parents are preparing for a new academic year. It’s an exciting time that often comes with a big price tag: Kids need a seemingly endless list of supplies, new outfits, lunchbox snacks, craft supplies — and that’s on top of the cost of tuition that some pay, and additional childcare.

According to our recent Wealth Watch survey, parents are getting creative to manage these costs, which have become increasingly challenging with the rising expenses of education and childcare. On average, parents report spending $718.55 on their child’s education and $610.68 on childcare / daycare each month. Our survey found that one-third of parents use their credit cards to cover their children's monthly education (33%) and childcare (31%) costs.

Despite challenges, parents can still take steps to ensure financial success for themselves this academic year. Here are five tips to follow:

1. Know your costs in advance and create a financial strategy

Understanding your costs in advance and developing a strategy to cover these expenses with your income is crucial. Our survey revealed that 42% of parents with child education costs and 40% of parents with childcare costs report increased monthly bills compared to last year. The average increases are significant: $412.66 for education and $279.25 for childcare.

Schedule a planning session involving key decision makers in your family like your spouse or partner and take stock of the additional charges that will be coming down the pike with the start of the new school year. This includes “start-up costs” like supplies and clothes, as well as recurring costs like tuition. Plan to set aside additional funds for holidays and events that require some extra cash for the kiddos, like Halloween, Valentine’s Day, birthday parties, and class trips.

2. Don't forget to save for the unexpected

Once you make your financial strategy, be ready to throw it out. In other words, plan for the unexpected. Our survey found that 39% of parents currently have an emergency fund, and 41% plan to start one. Parents with an emergency fund report having an average of $36,855.16 set aside. Additionally, parents have an average of $11,285.78 saved for their children’s future education.

An emergency fund is a crucial back-up support for when unexpected expenses arise, as they naturally will. This fund should not be for events and expenses you can predict, but for genuine emergencies and unforeseen circumstances that aren’t planned for in your budget.

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