Back-to-School Money Blues & How to Beat Them

When you have school-age children it feels like summer break lasts forever and going back to school happens too soon. At what point are you supposed to switch from summer activity planning to budgeting for backpacks? The cycle seems never to end, but you can get ahead of it with dedicated financial planning.

Here’s some ways to beat those back-to-school money blues you can start right now.

Create a sinking fund.

A sinking fund is a savings account for a future dedicated purchase. The premise is that you take the overall cost (this could be an educated estimate) and divide it into more digestible chunks. For example, if Shelley Student usually requires $300 each year for back-to-school purchases and you put $25 per month into a savings account in August, then the following August you would have $300 towards Shelley’s school supplies.

Now, if you’re smart, you can earn interest on your accumulating $25 with interest-based savings accounts. There are typically several options from high-yield savings accounts to club accounts. You can set up automatic transfers to both types of accounts, the difference is that one – you have regular access to your money and the other keeps the money safe for you until a dedicated date.

There’s no wrong way to save; learn about your savings options today.

Consider a Share Certificates of Deposit.

If you are lucky enough to already have a starting amount of savings. You can place it in a share certificate account, which is similar to a CD, and earn interest for a set time (referred to as the term). There are share certificate terms available anywhere from 6 months to five years. It depends on the financial institution and their offerings.

Say the Student household has three children – Shelley, Emma, and Becky - and within two years Emma and Becky will join Shelley in school. You know that back-to-school supplies will be expensive for three kids, but you have $2,000 to put into a 24-month CD now. At 3.928% interest (resulting in an annual percentage yield of 4%), you would have $2,163.18 when the 24-month term ended.*  

You might not be winning the lottery, but you will have a safe place to keep your savings that will assuredly increase its value at a dedicated rate. That’s $163 more dollars to put toward school supplies.

Learn more about share certificates of deposits.

Have a family money conversation.

It’s never too early to start good spending habits. Children often make money with allowances, chores, or birthdays. Consider teaching them to set aside a designated amount for a special backpack, notebook, or outfit. That way, you are teaching them healthy money habits and responsibility. It also allows you to have a better idea of your back-to-school budget. Many financial institutions have Youth Savings Accounts with special offerings to make learning about the power of money easier.

Check out these youth savings options.

You don’t have to be stressed when it comes to a Back-to-school budget with the right planning. Whether you’re trying one of these options or all, it’s going to make getting back into your school routine that much easier.

Talk with a Financial Service Representative today.

*Rates and numbers are to be used for learning purposes. Please see a Maine State Credit Union financial representative for actual terms, rates, and conditions.