Are you budgeting for the extras?

How do you keep from having your child’s fun from bankrupting you?

It doesn’t seem like much in the moment: three dollars for a school trip, five for pizza lunch day, ten for a book order. But wait, what about the $80 you just shelled out for swimming and the $400 that’s due for hockey? That’s in addition to the $50 you just spent on a dance costume.

Some days, it feels like the kid calculator never stops churning. There’s always something that requires yet another cheque or swipe of the debit card but, unlike a monthly bill, many of these one-offs sneak up out of nowhere – and usually at the least opportune time.

To make sure you’re always covered, and never left hoping you didn’t stiff the school or soccer club with your last cheque, it’s important to budget in the extras, according to Sandra Sherk, manager of Credit Counselling Service of Durham Region.

“What do you anticipate for the next twelve months? You need to look at it as a year-round part of your budget,” she suggests.

When calculating that amount, it’s important to include everything. If it’s hockey, add up the cost of out of town tournaments and estimate how much you’ll spend each time on hotels, meals and gas.

Once you’ve added all of the extras up, divide by 12 and set that amount aside each month in a separate bank account. Sherk says even just taking this first step will give you a good indication of whether or not you can afford the activity.

“If you’re budgeting all the time, you’re going to know what you can and cannot do,” she says. “For someone who hasn’t been budgeting and wants them in hockey, swimming and snowboarding, they need to sit down before they sign up and look at what they can afford. I do see people who run into difficulties because of the lifestyle they’re giving their children.”

Sherk says it’s important to keep a record of how much money has been allocated to each activity or event. And she strongly recommends you do not have access to this account with your debit card.

“Now that few people use cash, I tell them you don’t want to keep money in your debit account that you can’t afford to spend or you don’t want to spend,” she says. “When you want the money you have to go to the bank. You’re not going to be tempted.”

Sherk suggests making a note after each withdrawal so that you always have a picture of what’s left in the account.
“You may say, “Hey, we have $600 in that account,” but it’s accounted for,” she says. “Yes, we have it – but we know that next month we have to pay for hockey registration and after that we’ll have to buy snowsuits for the kids.”

Of course, you’re not going to want to run to the bank every time your child needs $5 for pizza day. When Sherk’s son, now 18, was in Grade Two they started a school jar. Every month, they would put in 10 dollars in loonies and toonies.

Whenever they had to pay for a hot lunch day, Scholastic book orders or class trips, the money came out of the jar. Her son took responsibility for managing the jar and got a lesson in budgeting at the same time.

“He would literally look in the jar to see what he had to spend. Once he started doing that, when Scholastic came he would narrow it down to one,” she says. “It got to the point where Scholastic would come and go and there wasn’t anything he wanted.”

“What’s really cute is when you see a seven-year-old looking in the jar to see if he had one or two slices of pizza. As he got older, of course we increased the amount.”

Sherk stresses that the jar was untouchable; it couldn’t be used to pay for the newspaper or a loaf of bread. Ideally, you won’t need to borrow from the jar anyway, because you will have a separate, manageable, budget for groceries, she says.

“People shouldn’t be afraid of the word budget. If you’re doing bi-weekly mortgage payments, you’re likely buying your groceries bi-weekly, you’re doing your gas bi-weekly. Why not think of the occasional expenses bi-weekly, as well?”

For more information or tips on budgeting, visit www.ccsdurhamregion.com.