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Student debt is on the rise, each year graduates face higher debt levels. Statistics Canada's National Graduates Survey is conducted once every 5 years. The survey documents student debt from all sources, by province and level of study across Canada. The last report was released in 2010. At that time, it was recorded that the average debt owed upon completion of a college education in 2010 was $14,900.00. Learning how to budget as early as possible, can help graduates navigate living on entry-level salaries while honouring student loan repayment terms.

If you haven’t started teaching your kids how to budget, this years’ back to school shopping season is a prime opportunity. Here are a few ideas to help you get started.

How to teach your kids back to school shopping on a budget.

First things first, have a conversation with your kids. Sit down and discuss budgeting. Explain what the plan is, how it will work, and inspire confidence. Keep your kids involved from the very start of the process. Make sure you demonstrate for them what’s in it for them. Outline the benefits of your new budgeting plan. Don’t forget to explain that it’s truly up to them if they stick to their budget or not. If they choose to overspend and can’t complete their list – there will be no “bail outs”. Once you’ve got their attention (and buy in) you’re ready to get started.

Set your budget

Make a list of everything your kids will need to buy. Make sure that you list each item individually. Group together the things that you can. For example, pencil case contents or binders and stationery, can all be considered “school supplies”. You can also group running shoes, gym bag and gym clothes as one expense under “gym class supplies”. Once you have your groups of items, set a realistic budget for each category. Ask yourself two questions:

• Do all of the expenses add up to less than your total budget?
• Are there any expenses that are “unnecessary” or that could be purchased second hand?

If you need to make adjustments, make those adjustments before you withdraw cash for your back to school shopping budget needs. Make sure that your personal limit for spending is not exceeded. Your kids will have to adapt to the budget you’ve set – not the other way around.

Use the envelope system

Withdraw enough cash to cover your budget. Purchase envelopes and use them to list each of your budget categories. Have your kids list the items included in each group clearly on each corresponding envelope. Divide up the funds you’ve withdrawn to fill each envelope with the budget amount you estimated earlier. Your kids will take these envelopes and spend according to each individual budget category.

Explain to your kids that they are always permitted to move some money around between envelopes – as long as they return with all of the items they’ve budgeted for. Saving more in one category can mean coming out ahead, or having more to spend on something else. Allow your kids to decide for themselves with minimal coaching. Head for the local mall and take them shopping.

Close the loop, talk about the results

After the shopping trip is over, don’t forget to reconnect with your kids to discuss the results. Sit down together and review each budget category. Reward your kids for coming in under budget, on target, for not overspending and using their funds wisely. Hopefully, your tips, examples and explanations have helped them to stay on budget and they’ve arrived with everything they set out to purchase.

Ask questions – let them know that you value their thoughts on the experience. Did they enjoy back to school shopping more because they could make their own decisions? Would they like to use this method again next year? What would they change about how you did things? Keeping your kids involved and invested will also keep them interested.

Get Debt Help if You Need it

Setting a good example is also part of the equation. If you’ve got debt your kids might be picking up on your financial distress signals. It’s hard not to broadcast money trouble – even if we don’t say anything about it. Money trouble and stress are often obvious to the people closest to us so don’t assume your kids are in the dark. If your debt is holding you back, chances are your kids have picked up on the fact that something isn’t right.

Get debt help, a clean slate will help you get back on track. Your kids will appreciate your commitment to finding freedom from debt. You can also use your consumer proposal or bankruptcy experience to teach your kids more valuable lessons about money. Budgeting is essential – whether you’re doing it for back to school shopping – or to recover from bankruptcy or proposal.

Be Prepared to Say “No” – Set Limits

Last but not least – don’t forget to set limits. Limits are important and your kids need to understand why there isn’t a limitless budget for back to school shopping. Don’t be afraid to say no to them if they make the wrong choices. For example, if your son or daughter spends all of their money on clothing and ignores other areas budgeted for – don’t bail them out. It may be tempting to replenish their envelope(s) and let them continue to spend, but this teaches them nothing. Your kids will thank you later – the bank of mom/dad may not be there in post-graduation life.

Set limits for your kids but also set limits for yourself. Know how much you can afford to spare for back to school shopping and don’t overextend yourself. Avoid using credit and try to avoid allowing your kids to use your credit card(s) while shopping for back to school.

Speaking of credit cards, if you’re are “maxxed out” and you need help with a debt problem, please connect with a member of our team. We’ll help you become free from debt – today.