Back-to-school shopping is expected to increase this year according to MasterCard International's second annual Back to School Spending Index survey. College age and under students might expect to have an average of $573 spent on them by their parents this year in preparation for the new school year according to the survey. The National Retail Federation reports that we Americans spent a total of $40.6 billion in back-to-school shopping in 2004.
MasterCard is seeking to further understand consumer buying behaviors and attitudes especially concerning money management and back-to-school spending. Their survey is based on a statistical sample of 292 parents with at least one pre-school to college age child, who were planning to use credit or debit cards to make these purchases. The sample group gave a typical distribution of the adult population in this country. The firm Ipsos-Insight prepared this survey for MasterCard.
The survey found that 37 percent of parents expected their spending to exceed last year's. 22 percent of parents also estimated their purchases of books, clothes, and school supplies would to be more than $750 of which clothing will be the majority of their total purchases. Purchases using credit or debit cards were divided at 27 percent using credit cards and 26 percent using debit cards for a total of 53 percent.
âParents have come to rely on the convenience and flexibility payment cards provide when paying for purchases, during the busy back-to-school season,â said Fred P. Gore, the senior vice president of MasterCard International. âAs the survey demonstrates, parents are planning ahead for expenses associated with back-to-school purchases and recognize that payment cards are especially useful for managing their personal finances.â
Planning and budgeting is important for families and important to teach to children as well.
âWhen children are old enough to understand money, put them on a budget,â said finance professor Lance Nail, Ph.D., speaking with Newswise.
He advises parents to let their kids experience it first hand by allowing them a set budget for back-to-school clothes, for example. With a budget in place, parents can teach their children to shop for quality items and bargains.
âIf they spend half their budget on one item, let them live with the consequences. They'll get angry and plead injustice. Don't cave in. It will pass, and you'll end up with a child who knows the value of money and isn't swayed by advertising. And, never give them a credit card,â Nail adds.
The survey found that 66 percent of the responding parents made advance plans for this yearly ritual. Fifty-seven percent of these parents either planned to shop at pre-determined times before the start of the school year or waited for sales at stores where they traditionally shop. The remaining 9 percent of these parents planned to wait for the occurrence of their states' sales tax holidays.
A minority of states have legislated these holidays including Alabama, Florida, Georgia, Iowa, Massachusetts, Missouri, North Carolina, South Carolina, and Texas. These two to four day tax holidays are approved on a yearly basis and individual counties may opt out of the holidays depending on the state. The state governments set maximum limits on tax exempt items such as between $50 and $100 on shoes and clothing, between $20 and $100 for each school supply item, and between $1500 and $3850 on computers for personal use only.
There may be additional conditions on some items. Computer peripherals such as monitors and printers may be tax-exempt when purchased together with a computer but taxed if purchased separately. Rentals are usually not tax-exempt. Clothes allowed to be tax-exempt may have to conform to a standardized dress code in some states. Athletic gear and clothing may or may not be tax-exempt depending on its primary uses.
States compile and make available lists of approved items to ensure consumers know which items are tax-exempt and not. The tax holidays usually occur in late July and early August to take advantage of back-to-school items mainly.
Charles Willey, a Georgia Department of Revenue spokesman, told the Henry County Herald that the state government lost tax revenue totaling $9.9 million while local governments lost $6 million in 2004. These numbers were compiled by the Georgia State University Fiscal Research Center. The Massachusetts Department of Revenue calculates their 2-day tax holiday will cost about $14 million in tax revenues.
âIt's a good deal for me,â said Kemisha Rainge of Port Orange, Florida speaking with the Daytona Beach News-Journal. âAnd since I have a tight budget, I plan to take advantage of the tax-break holiday.â
Stores and malls remain open longer to help satisfy and smooth out the high tide of consumers.
âWe have extended our hours for the tax-free weekend,â said Andrea Brinkman, a spokeswoman for the Southlake Mall in Morrow, Georgia speaking with the Henry County Herald. âOur stores saw positive increases last year, which is why we decided to extend the hours this year.â