Senioritis: Expect Big Expenses for High-School Seniors
Acquiring a cap and gown is just the tip of the iceberg when it comes to senior year expenses. "Because of all the events happening that year, it's not just graduation," says Patricia Seaman, senior director for the National Endowment for Financial Education (NEFE), Denver. Her daughter, Katie, graduated from high school in May 2011. "I was surprised how early you have to start anticipating costs."
She recommends starting to plan during your student's junior year. "College visits can start junior year, and students take standardized tests—the ACT and SAT—that year," Seaman says. "Katie made a lot of college visits between junior and senior year, and her first college application fees were due in fall of senior year. Then there's a housing deposit and other fees for the college you choose."
Starting with Katie's junior year, there was always something new. "We'd think we were near the end and then new expenses would pop up," Seaman recalls. "If it's your first child, you don't know what to expect and that makes it hard to plan."
If your budget is tight, you might be unable to use your current paycheck to meet these costs along with paying your regular bills. "But if you start early, and divert even $10 a paycheck into a separate account, it gives you a head start," Seaman notes. "A group of expenses tend to come in fall of senior year, and then another in spring."
While the list of expenses may seem overwhelming, there usually are lower-cost choices.
If you can't save regularly, you may be able to take advantage of a windfall, such as a tax refund or an employee bonus. Or relatives might help out—Grandma may want to pay for a senior trip as a graduation gift. Some people work overtime, or even get second jobs and put money aside.
The expenses families encounter can include:
While the list of expenses may seem overwhelming, Seaman notes there usually are lower-cost choices, and many items are optional. "Sit down with your child and talk about what's essential, what's important, and how you'll pay for things," she suggests.
"Katie needed to rent a gown and buy a cap and tassel to walk in graduation," she adds. "Yearbook ads, a class ring, senior trip, and parties weren't essential. For us, it came down to an ad or a ring, and Katie chose the ring."
"Make coordinated decisions; don't decide each thing as it comes up."
The process creates teachable moments about wants vs. needs.
"We talked about the need to make choices, how important different things were, and how important they'd seem 10 years down the road," says Seaman. "For some families it may come down to paying for college application costs, but none of the other things.
"There's value, too, in teaching that just because others do certain things it doesn't mean we have to," she continues. "Every school has a culture of what's important to students and parents. It's important to understand the culture, but you don't have to be driven by it."
Seaman was surprised by how many families opted for $500 packages of graduation photos. "That's a lot of money and it would be easier to use her regular school photo, but Katie didn't want that. So we took a photo of her in front of a waterfall and submitted that. It was a compromise she made to get her class ring. Another compromise was ordering a less expensive alloy ring rather than gold or silver, although she did get a semiprecious stone." One more idea is to choose a ring that isn't a "class" ring, but is something your child would prefer to wear more often and for a longer time.
You can select lower-end graduation announcements or even make your own, and when it comes to hosting parties, you can join with other families and share the costs. Holding celebrations in a backyard or park is free, and if everyone brings food and supplies it's relatively inexpensive. "Most decisions will have tiers of costs," says Seaman.
"Even if you've made mistakes, share what you wish you hadn't done and suggest they make different decisions."
You also can have your child contribute. "That's when you find out how important something is to them," Seaman says. "If they want it, but not enough to 'waste' their own money on it, it's an opportunity to discuss how valuable it is, really."
She recommends looking together at all possibilities and creating an entire picture of what you'll spend. "Make coordinated decisions; don't decide each thing as it comes up."
You're getting your child ready to take the first steps toward independence, whether your student is going to college or work. "The lesson is, it's better to make do with your resources than go into debt just to keep up with others," Seaman explains.
"NEFE studies show parents are the most important influence on their children's financial behavior—between your teaching, your expectations, and their observations," she says. "Even if you've made mistakes, share what you wish you hadn't done and suggest they make different decisions."
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