Back to School Budget Blues

Labor Day is behind us. Pools are closed for the season. And you are back in the swing of your school year routine. Now might be the first time you have had an opportunity to review your bank statements since your kids needed new clothes, shoes, school supplies, and sports gear. The expenses came at you fast and furious. Before you knew it, you had spent more than you would have wanted. You have a case of the back to school budget blues.

Do not fret. You can make some simple changes to cure the back to school budget blues.

1. Write it down. You don’t have to keep track of your budget and expenses in your head. Start with an itemized list including a total budget. Keep track of expenses as you go so that you know where you need to make adjustments on the go.
2. Be realistic. Don’t be over-conservative. I see this all the time. A client will state that an expense is much lower than in reality. The outcome is that the client blows past the budgeted amount, which impacts decisions and the ability to pay for another item.
3. Try to stay under budget. You almost always come out better when you spend less than your budget. This is not always possible, but should be a goal.
4. Want vs. Need. How many of us heard this growing up: do you want it or do you need it? You should answer this sage question when creating your budget. Provide yourself a category for wants because it is okay to treat yourself every once and awhile.
5. Learn how to say “No”. We all do it, say “Yes” to avoid someone’s negative reaction if we were to say “No.” However, we can’t give more than we have. Math does not lie. If you have $4,400 net household income, spending more than that will mean tapping into savings or credit. Saying “No” is a powerful tool to ensure you stay under budget.
6. Save. This is easier said than done. Recent studies suggest that the almost 50% of households in the United States couldn’t come up with $400 if they needed it for an emergency. If you work more overtime than usual, save the extra income. If you receive a bonus, save that extra income. If you receive a sizable tax refund, save it.

Over the course of the year, there are several opportunities for you to review your finances. For some it is around the holidays. For others it is right before they receive their tax refund. For people with school-aged children, it is right around the time that school starts. No matter the time of year, that review could show whether or not you are in financial distress.

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