NerdWallet's Smart Money Podcast - Back-to-School Budgeting: Strategies to Save on School Supplies

Episode Date: August 14, 2024

Learn budgeting and money-saving tips for back-to-school shopping to avoid debt and make the most of sales and discounts. What are the best ways to save on back-to-school shopping? How much do people usually spend on school supplies? Hosts Sean Pyles and Anna Helhoski dive into the latest NerdWallet survey results on back-to-school shopping, revealing spending habits and budgeting strategies. NerdWallet’s Sara Rathner joins the conversation to discuss the survey and provide actionable tips on saving money, avoiding debt, and making the most of sales and secondhand purchases. Then, Sean and Anna discuss recent money headlines, including jobless claims and market reactions, along with the latest developments in mortgage rates and housing trends.  You can find NerdWallet’s guide to first-time home buyer loans and programs here: https://www.nerdwallet.com/article/mortgages/programs-help-first-time-homebuyers  In their conversation, the Nerds discuss: back-to-school shopping, budgeting tips, school supplies, avoiding debt, money-saving tips, personal finance, credit cards, shopping habits, financial planning, student expenses, cash-back rewards, sales and discounts, secondhand shopping, inflation impact, spending strategies, jobless claims, mortgage rates, housing market trends, school budgeting, smart shopping, debt management, financial tips, online shopping, buy now pay later, cashback apps, coupon codes, price tracking, first-time home buyers, home buying tips, mortgage guide, financial news, back-to-school deals, credit card usage, debt prevention, family budgeting, and financial literacy. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Anna Helhosky. And this is our weekly money news roundup, where we break down the latest in the world of finance to help you be smarter with your money. We'll go deep into a single topic and then leave you with the latest money headlines. Today, we're going back to school. Well, not us per se, but more than 50 million students will be over the next few weeks. And that means back-to-school shopping is in full effect. Just like that iconic Staples commercial says, it's the most wonderful time of the year. Well, not so much if you're trying to save money.

Back-to-school shopping can eat into family budgets, and some may even take on debt to do it. That's right. A recent survey by Harris Poll for NerdWallet looked at shopping habits of parents of children in K-12 or college for the 2024-2025 school year. We're joined today by Sarah Rathner, another of our co-hosts on Smart Money, and a travel and credit cards expert for NerdWallet to talk us through the findings. Sarah, hey! Hello! From the guest side of the microphone. It's actually the same as the host side. Except we'll be throwing questions to you. Oh, no pressure.

Let's start with some of the results of the survey. One that struck me was about how much people plan to spend on school supplies. More than a third of survey respondents said they would set a firm budget for back toto-school, and about the same said they'll talk to their kids about that budget. But that means about two-thirds aren't budgeting or talking to their kids about what supplies are costing them. Can you talk a little bit about how shoppers are approaching the back-to-school season? Yes. Parents of K-12 students are spending $541 on average this year for clothing and school supplies. Whenever you're going to spend a lot of money in a really short period of time, I mean, you're going to look for ways to save. That's just natural. So parents are doing things like setting budgets, shopping sales,

and some are even limiting their purchases to just what's on the school supply list. Nothing more. Sarah, it seems like inflation isn't stopping shoppers from buying what their kids need, or in some cases want, for school. Listeners, inflation growth has slowed down, but prices are still elevated compared to where they were for years ago. And yet, the survey showed that just 16% of shoppers plan to buy fewer supplies than they used to. So are people just getting used to prices being where they are? Or are they more creative with finding ways to save without skipping out on

purchases? Well, as always, there's some resigning yourself to higher prices, of course. Sometimes you just don't have the option. But 52% of back to school shoppers told us that they were going to take advantage of sales, which is great. There are lots of sales going on even now as we record this episode. And just 38% plan to buy all new items. So that means that families are shopping inside their own homes to see what supplies from previous years they have that can be used again. And 23% of shoppers plan to buy some items secondhand. And there's always the good hand-me-down. I say that as the youngest of four kids. I'm well experienced with that. I'm the younger of two and definitely got some hand-me-downs. Yep. Okay. Well, let's talk about how people are paying for

supplies. As you might expect, cash is not king. The survey found that most people, about two-thirds, are using a debit card and or credit card to make purchases. The trouble with credit card usage is that it suggests potential debt that shoppers might be taking on. Yes, that's absolutely the case. Just 10% of shoppers said that they'll likely go into debt to pay for school supplies this year, but 20% said that they'll use buy now, pay later services. And that's a decently sized gap, which might mean that many shoppers don't see buy now, pay later as quote unquote debt, but it actually is. It's a short-term loan. Here's the thing, buy now, pay later can be a helpful tool, especially for a large purchase like a new laptop. But you want to make sure that you can afford to make the payments

on that plan on time, every time until the purchase is paid off. Because if you miss a payment, it can have a negative effect on your credit score. Speaking of debt, to me, this was the most worrying fine from the survey. It said 42% of parents say they'd go into debt to pay for back to school items to help their kids fit into school, like brand names or premium items. We know that keeping up with the Joneses behavior like that can be problematic. Yeah, but it's nothing new. You know, even the phrase keeping up with the Joneses is more than 100 years old. Fun fact. And the thing is, we're all human beings. We want to belong somewhere. And one of the ways that we do that is by dressing and behaving like our peers. It's

especially true when you're younger and you're in school, you feel that pressure. I think this could be an opportunity for parents to have age-appropriate conversations with their kids about where high-end items like those $28 water bottles fit into the back-to-school budget. And maybe as a family, you decide that each child or teen gets to pick one fancier item with a price limit, or you save those items for a birthday or holiday gift later on. But this is definitely a good time to have those needs versus wants conversations with your kids. So Sarah, what are some ways that back-to-school shoppers can score some deals?

Well, there are a couple ways that you can score deals and also stack discounts on top of discounts. Like many of the responders in our survey said, they're going to shop sales. Big retailers like Target and Walmart have back-to-school sales going on now, for example. You also want to think about how you're going to pay for those purchases. If you're going to use a credit card, which many people are, you want to pick that card carefully. Assuming you don't have credit card debt, choose a card that earns cash back, especially one that earns cash back maybe at the retailer you're making a purchase from. And for really big purchases, consider getting a new card so you

could earn a sign-up bonus on that. That purchase can get you most of the way there to a sign-up bonus. And those things can be worth about $150 or more. You also want to maybe consider a credit card with a 0% interest offer for a big purchase like a laptop computer. And then get creative to save money. Maybe one of your friends has a membership to a warehouse club and they can go out and buy some bulk amounts of items like a giant pack of glue sticks or multiple packs of paper. And then a group of parents can get together and divvy up those supplies and the costs of those supplies. And it's cheaper than just buying everything on your own. And then we talked about secondhand shopping, always a great idea, not just in thrift stores or consignment stores, but also online. Facebook Marketplace is a rich resource.

Just watch out for scammers. And then look into your local buy nothing group. That's a group also on social media, typically Facebook, and it's neighborhood-based. These are just groups of people in your immediate area who are gifting items back out into the community or also seeking items from the community as well. And so you can see what people are giving away. I imagine, Sarah, that many people are buying items with online retailers. So what are some tips for those specific shoppers? There are a number of apps and browser extensions you could download that can help you save money. Some will earn cash back when you make purchases at retailers that participate with that app. So one example is Rakuten. That's a big cash back app. You can also use tools that help you find coupon codes. There's an app and a browser extension called Honey that will automatically scan for coupon codes when you put an item in your cart and you go through checkout. And then there are also browser extensions like Camel, Camel, Camel that does price tracking on Amazon. So you can identify when is the ideal time to make this purchase. If you don't have to make the purchase today, if you can wait, then you might end up getting a better

deal later on. And there are all sorts of other extensions that will, for example, let you know if you're getting the best price at that particular merchant or if you should go to another merchant's website to get a better deal. Use technology to your advantage. These tools are free and they are really helpful. Great. Well, thank you for those tips. And thanks for joining us today, Sarah. And thanks for having me. And to everybody out there who is back to school shopping right now, good luck. First day of school is coming. You'll get your time back, maybe. Up next, a few money headlines from the last few days. So, Anna, remember way back last week when the Dow dropped 1,000 points in a day after a weaker-than-expected jobs report? And we encouraged our dear listeners to tune out the daily noise of the markets and concentrate on what they can control? I do remember, Sean, and I hope folks took those words to heart.

Yeah, because if they panicked and moved their money out of stocks, they would have missed the bounce back that came throughout the rest of the week. Right. In fact, last Thursday, the government reported that the number of weekly claims for unemployment benefits had dropped. So that was some good news to offset bad news a few days earlier. And, well, just try not to focus on these daily movements, as we've noted. Yep. Again, pay attention to what you can control, which is how you make, spend, and save money. You'll sleep better than if you pay attention to the wild headlines. We have a couple of developments in the housing industry. Get it, Sean? Developments? Yeah.

I know. I'm sorry. So anyway, the first ray of light is that mortgage rates fell last week to their lowest level in 15 months. The average 30-year fixed rate stood at 6.47%, down a quarter percentage point from the week before. Meantime, a report out from Zillow says new homes under construction are now cheaper by the foot than existing homes. Yeah, Zillow notes that before the pandemic, new homes were more expensive than existing ones by anywhere from $15 a foot to $22 a foot. But now a new home can get you a discount of $3.50 a foot. That's a significant turnabout and the biggest discount in six years. Now, this doesn't mean that new homes are getting cheap.

They're still selling for more than $50,000 above existing homes. But it does mean that you're getting more house per square foot of cost. This is apparently because builders are offering more incentives than people who are selling the homes they're already in, and lot sizes are getting smaller. If you're in the market for a mortgage, NerdWallet has a guide to first-time homebuyer loans and programs. You can find a link to that in today's show notes or search online for NerdWallet first-time homebuyer loans. And that's it for this week's money news. We always welcome your money questions and comments.

Turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. Or send us a voice memo at podcast at nerdwallet.com. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes. Today's episode was produced by Tess Vigeland and myself and edited by Rick Vanderkneife. And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.