Some families could be in for a world of financial stress.
- Parents across the country are gearing up for back-to-school shopping.
- This year, they won’t be privy to extra stimulus funds to offset their costs.
August tends to be an expensive month for parents, because it’s when back-to-school shopping kicks into full gear. From apparel to sports equipment to classroom supplies, now’s the time for parents to load up on the items they need to get through the 2022-2023 academic year.
But this year’s back-to-school shopping experience is apt to be different for parents for one big reason — there’s no stimulus aid to fall back on. And at a time when living costs have gotten even more expensive, parents will no doubt be forced to raid their savings or rack up credit card to ensure that their children have debt what they need for the school year.
Last August, parents of children were sitting on a modest but notable windfall thanks to the boosted Child Tax Credit. The American Rescue Plan, which was signed into law in March of 2021, enhanced the credit by raising its maximum value and allowing half of it to be paid to parents in monthly installments starting in July. As such, at this time last year, many parents were sitting on not just money from the credit, but also, leftover stimulus funds.
This year, however, there’s no stimulus aid to be found. Meanwhile, back-to-school shopping is apt to be even more expensive because the costs of goods are higher across the board due to inflation.
The National Retail Federation reported last month that 84% of parents are anticipating higher prices on back-to-school items. As such, parents are shifting their shopping habits by doing more comparison shopping online and seeking out store or generic brands to lower their costs. But even with those tactics, many parents could easily wind up in debt in the absence of stimulus aid.
When will inflation start to cool?
The Federal Reserve is in the process of aggressively raising interest rates in an effort to slow the pace of inflation. If consumer borrowing gets more expensive, spending is likely to decline. Once that happens, there won’t be such a wide gap between the supply of available products and consumer demand, which should lead to lower prices.
But even if inflation does cool at some point this year, that won’t happen in time for the back-to-school shopping season. And so in the coming weeks, parents may need to make a lot of hard choices — and run up credit card tabs that only push them further into a financial hole.
Making matters worse is the fact that parents who do incur credit card debt in the course of loading up on back-to-school supplies could end up paying more interest on it thanks to the aforementioned interest rate hikes being rolled out. And while it’s easy to argue that parents could have, and should have, saved up in advance for back-to-school gear, many just haven’t had that option.
Not only is the cost of gas, groceries, and apparel up from last year, but rent prices have soared as well. Parents struggling to put a roof over their families’ heads may not have been able to save for back-to-school supplies because they were busy avoiding homelessness. And so now, those same parents risk seeing their financial circumstances worsening at a time when they should be getting excited about a new school year.
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