Annual budgeting for school costs

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So you survived Christmas, you’ve seen in another new year and now you’re gearing up for the onslaught of spending more money to get your kids ready to head back to School! It’s certainly an expensive time.

As I contemplated what to write for this article, the obvious sprung to mind – I could write about the best ways of cutting costs as we get our little cherubs ready to head back to school. You know – things like considering buying good second-hand uniforms instead of new, recycling stationery and books from last year and throwing them into the mix for the new school year, that type of thing. But generally speaking, most mums are pretty resourceful and know about this practical stuff already. So that meant answering the following question: what else could I write about that would add value and hopefully help reduce some financial anxiety in getting your kids ready for the next school year?

Are you one of those families that muddles through by maxing out your credit card over this busy time or do you actually have a budget? If the former part of this question applies to you then continue reading.

What I am about to say, cannot be used for this time of the year since the time for our kids to start the school year is upon us now, but certainly I can help you plan for getting your kids back to school for the 2014 school year. In the same vein as my last article, it’s all about planning. So how do you do that? First you need to get a handle on all of the true costs of sending each child to school. Try to be as specific as you can and list each item and its related cost down. These costs may include:

  • Uniform , say – $460.00
  • Shoes – $115.00
  • Stationery – $80.00
  • School Fees – $220.00
  • School Association Fee – $15
  • Camp fees – $350.00
  • Sports Team Uniform, footwear/gear and fees – $300.00

You may think of other costs, such as public transport use to get your child to school.

Note: the above examples are actual costs for one of my children who attend our local public high school. Remember, your costs may be quite different, depending on a number of factors like where your kids go to school, whether they require a uniform at all, whether you buy second-hand etc. If you think this all sounds very expensive, consider what these costs may look like if you send your child to a private school.

Once you have a good idea on what it’s going to cost you for each child for the entire year at school, then break this cost down into bite size chunks. Choose a frequency say, monthly or fortnightly and factor this into your overall family budget. Squirrel these amounts away.

In this particular example, you would need $1,540 for the entire year (setting aside $128 per month) for one child. By the time you get to this time next year, you will be prepared. You can rest easy knowing that you don’t have to max out the credit card, or fret about where you’re going to come up with the money to get your kids ready to start and participate throughout the entire 2014 school year.

In the meantime, for this time around, if you do need to use your credit card this year to meet ‘back to school expenses’ then appreciate that your credit card has an interest rate approximately three times higher than that of your home mortgage so your number one priority should be to pay off that credit card as quickly as you can. This may mean talking to the bank and halting capital repayments on your mortgage for a month or two, or hunting through the garage and cupboards to see what you and the kids no longer need or use and selling that on TradeMe.

If you have a revolving mortgage then consider adding the ‘back to school costs’ onto that revolving mortgage facility and incur interest at the lower rate of 5-6.5% rather than the credit card interest rate of 13-20%.

And lastly, consider talking to your school about staggered payments throughout the year for the various school/camp/sport activity fees. They may charge more for this or in using this option you may not have access to prompt payment discounts but often the additional cost is less than the cost of interest on a credit card. Good luck!

Useful Websites:

Budgeting – https://www.sorted.org.nz/a-z-guides/budgeting

Money Planner – https://www.sorted.org.nz/calculators/money-planner

Vinessa Orsbourn

Vinessa is passionate about assisting clients to achieve their financial goals. This passion, combined with specialist financial qualifications, and years of work and life experience makes her eminently qualified for advising families and individuals on the most appropriate way to protect assets and build wealth. Vinessa is married to Graham and together they have two boys and one daughter, Marc, Liam and Olivia.

Disclosure and Disclaimer:
A disclosure statement is available on request and free of charge. While every care has been taken to supply accurate information, errors and omissions may occur. Accordingly, Milestone Direct Ltd accepts no responsibility for any loss caused as a result of any person relying on the information supplied

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Categorised: Grown Ups
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Please note that this article represents the views of the writer and does not necessarily represent the views of Kiwi Family Media Ltd.

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