Children can be life’s greatest joy—and it’s most expensive. From the necessary expenses, such as food and shelter, to the not-so-necessary—Air Jordans and Hannah Montana apparel—your kids can put a major dent in your wallet and drain your bank account.
“I can’t tell you how many parents I’ve encountered that feel like its there job to give their kids what they didn’t have,” says Lynette Khalfani-Cox, founder and CEO of The Money Coach L.L.C. “I fell into that same trap,” she adds. Determined to give her children the best education, Khalfani-Cox sent her then 3-year-old and 5-year-old to private school at a cost of $30,000 a year, which helped to dig her into a $100,000 debt. According to the United States Department of Agriculture, the cost of raising a child born in 2007 can top $393,000 by the time the child is 18-years-old—and that’s not including college expenses.
Here are some ways parents can cut costs and still provide for their children.
Teach financial literacy. Take the time to explain to your children why you are cutting costs and how money works. If children have an understanding of household finances, they will be less likely to want to splurge, says Tony Searight, founder of Searight Investments, a youth investment club. “Cut out articles, and get your kids to understand what things cost. Cut coupons so you can get them to understand how much groceries cost,” he says. Parents need to let their children see where the money is going.
Rethink after-school activities. Consider limiting the number of activities your child participates in per semester or quarter. Sure, band, soccer, karate, and swim lessons can boost their college application and add extra skills, but consider honing in on just one or two skills per semester. Also, school-sponsored programs may have fewer fees than independent programs.
Do you really need private school? With the college application process growing more competitive, it’s understandable that parents want to give their children the extra edge, but at what cost? For Khalfani-Cox, it meant charging $30,000 in school related expenses to her credit card. “I sent them to the very best school I could not afford,” she says. Eventually she found a top-ranked public school in her district. Khalfani-Cox cautions parents against overlooking public schools. Examine the offerings of the schools in your district and get to know the teachers and curriculum before you say no.
Get college prep at a discount. No parent wants to skimp on college preparation, but with rates reaching $1,100 for preparatory courses such as those for the Kaplan, parents might have to consider less expensive options. There are some cost-effective programs that offer college preparation without the huge bill. Look into government-funded organizations such as Upward Bound and Gear Up which offer free SAT prep courses for students, sometimes starting in junior high school. Many high schools offer SAT prep courses during the academic year that students can add to their course load. Finally,