Back to school, back to reality

The sun’s shadows are longer, which can only mean that it’s time for kids to go back to school. What a difference from last year’s back-to-school season. Here are some of the realities:

• 20 percent of parents nationwide have set aside a portion of their stimulus check for back-to-school purchases, according to the National Retail Federation’s 2008 Back to School Consumer Intentions and Actions Survey, conducted by BIGresearch. The survey found that the average family with school-aged children will spend $594.24 on back-to-school purchases, compared to $563.49 last year. Total back-to-school spending for kindergarten through 12th grade this year is estimated to reach $20.1 billion.

• According to the National School Supply and Equipment Association, the average amount that teachers spent out of their own pocket last year on supplies and instructional materials was $1,752. The IRS guideline only allows them to deduct up to $250 per year.

• Student loans for college students have dried up – and in some states such as Massachusetts, the federally guaranteed students loans are largely unavailable. Now we have a situation where families are scrambling to find ways to fill the financial gaps so their children can go to college and in some cases, return to classes this semester.

• In a study released last year by the NHHEAF Network Organizations, 42 percent of New Hampshire college students currently in school had six or more open credit cards and almost half of that population was reported delinquent on their payments.

As fuel costs continue to remain high and unsteady, and with housing values on the decline, the pressure on a family’s ability to provide for their kids grows and grows. Why did we allow ourselves to think that the pools of money to borrow from would always be there? Why did we think that home values would always increase so it’s OK to take the equity out to buy more stuff?

Today’s realities have created the perfect teaching moment to have with our kids. Show them that old-school thinking of not spending more than you make, saving for a rainy day and paying yourself first are the best ways to get through good and bad times.

Kids are facing a more financially complex world than we ever could have imagined. Having a strong understanding of personal finance is critical to their future. We have been advocating the importance of financial education for children for almost a decade. Maybe now, during these challenging times, more people will listen.

Daniel Hebert, a former lender with over 23 years of banking experience, is president of the NH Jump$tart Coalition for Personal Financial Literacy, a nonprofit organization that seeks to improve the personal financial literacy of young people.