Are Your Kids’ Extracurricular Activities Straining Your Budget?

September 2021 Issue
"Ask Carrie" by Carrie Schwab-Pomerantz

Dear Carrie:
I’m the mother of a very creative 12-year-old daughter who wants to take classes in art, drama and dance, but I have a limited income. While we live a comfortable life, paying for all these extras is a real stretch. I don’t want to disappoint her, but I’m struggling. How can I handle this on top of everything else?  —A Reader

Dear Reader:
This is a question I’m sure a lot of parents can relate to. From sports to music to dance to computer coding, the world of kids’ extracurricular activities keeps growing—and getting more expensive. According to a recent survey, 46% of parents spend more than $1,000 annually on their kids’ activities, and 27% spend more than $2,000. Not only that, 62% go into debt to do it, with credit cards being the most popular form of payment.

And those numbers may be conservative. Kids Play USA Foundation, which helps low-income families cover the cost of sports, estimates that league team participation fees alone can range from $50 to $1,000 or more—per child. Then add in uniforms, equipment, travel and coaches and costs can skyrocket.

However, as every parent knows, extracurricular activities aren’t just about cost. They’re about things like personal growth, discipline, teamwork and self-expression. And being well-rounded can also play a part in getting into college.

It’s a real quandary for many parents because the money spent, while a budgetary stretch, can also be looked at as an investment in their kids. So one way to help you handle the expense may be to plan for it as you would any other investment—and get your daughter involved in the planning.

Start by Prioritizing Interests
When it comes to investing, I often start by talking about goal-setting and prioritizing. This might be a good way to present the situation to your daughter to help her understand that she can’t do it all.

What activity is most important to your daughter? Which one might she want to continue? Her short-term goal may be to take classes in everything, but what’s her passion? Let’s say she really wants to be a dancer. Talk about the type of lessons she needs and the commitment it takes. If she decides to invest her time and energy in a particular area, you can then decide what type of monetary investment you can make.

That doesn’t mean she can’t explore the other areas, and it’s probably a wise thing to do first if she has trouble choosing. There are no- or low-cost classes in school, community centers or even on YouTube that can help her decide what she really wants to pursue. The important thing is for her to ultimately prioritize her interests—and understand that by doing so she’s helping you prioritize how you’ll spend the money.

Do Some Research
As with any investment, you need to dig a bit into the details. Compare the cost of classes at different schools or studios. Ask about additional expenses such as clothes, shoes, equipment, potential competitions and related travel. Find out if scholarships are available.

And reach out to other parents whose kids are into the same things. They can share their experiences and feelings about a particular place, teachers or coaches. And their kids might also be willing to talk to your daughter about their personal experiences. All of this will help you decide the best place for your daughter to spend her time—and for you to spend your money. And if you do it together, I think your daughter will appreciate the final choices even more.

Add Extracurricular Expenses as a Line Item in Your Budget
If you haven’t shared basic budgeting with your daughter, now’s the time. At age 12, she’s certainly old enough to understand the concept of money in and money out. If you’re comfortable sharing some of the details of your household budget, you can show her what you’re putting toward essentials like housing, food, utilities, transportation and clothes and let her know what’s left at the end of the month for extras. How does that change when you add her activity expenses into the budget? Is she willing to make some trade-offs? Are you?
Ideally, savings is a line item on the essential side of your budget. If you haven’t done so already, add a special savings line for extracurricular activities. Maybe it will be just enough to cover the monthly costs of whatever classes your daughter chooses. Maybe you can add a bit more to give yourself—and her—some leeway. But if it’s in your budget, you won’t have to think of it as an “extra”; it will be something you know you have covered.

Make It a Joint Effort
Now that you’ve set your household budget, what about your daughter’s personal budget? If she gets an allowance, babysits or occasionally receives money for birthdays or holidays, suggest that she use a portion of that money toward her own activity. For instance, if she needs special shoes or clothes, she could chip in for those expenses. It might give her an even greater sense of purpose and accomplishment.

Set Your Own Priorities
Of course, we all want to give our kids the best, but you also need to be mindful of your own needs. Don’t sacrifice your emergency fund or your retirement. Making sure both are covered first, to me, isn’t really selfish at all. Being able to handle an unexpected expense is to everyone’s immediate benefit. And your long-term financial security will actually give your kids more freedom down the road.

Enjoy the Many Returns
The real return on the investment in your kids’ extracurricular interests is to watch them grow and develop into confident, well-rounded young adults. If you include your kids in the financial decisions it takes to fund their interests, whether that be the arts, sports, languages or computers, you’ll also be helping them develop financial skills that could boost their success—no matter which path they choose.

Carrie Schwab-Pomerantz, Certified Financial Planner, is president of the Charles Schwab Foundation and author of “The Charles Schwab Guide to Finances After Fifty.” Read more at http://schwab.com/book. You can email Carrie at This email address is being protected from spambots. You need JavaScript enabled to view it.. The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. ©2021 CHARLES SCHWAB & CO. INC. (MEMBER SIPC) DISTRIBUTED BY CREATORS.COM (#0819-9LAV)