It seems like just yesterday I shared my list of Summer Break Tips for Teachers. Now, a new school year is right around the corner and it’s time to prepare for it! Here are three financial tips to consider as you prepare for the upcoming school year.
1. Take Advantage of the Sales Tax Holiday
In Ohio, August 5-7 has been designated a sales tax holiday. Not in Ohio? Use this chart to determine whether your state participates and when the holiday may occur.
What is a sales tax holiday?
It’s a period of time during which you may purchase specific items without paying the added sales tax. Ohio’s current sales tax is 5.75%, but the total tax may be as high as 8% once local taxes are factored in. This means some of those back to school items you’ve had your eyes on may be up to 8% less expensive during the sales tax holiday!
What items qualify?
According to the Ohio Department of Taxation, the following items are exempt from sales tax:
An item of clothing priced at $75 or less
An item of school supplies priced at $20 or less; and
An item of school instructional material priced at $20 or less.
Items used in a trade or business are not exempt under the sales tax holiday.
If you’re in Ohio and have been waiting to purchase binders, pencils, jeans, shirts, shoes, or many other back to school items, August 5-7 may be an excellent time to head out to your local retailer and participate in the sales tax holiday!
2. Review Your Budget
Don’t have a budget? Now is a perfect time to put one in place so you may easily monitor income and spending throughout the school year! Use an online platform like mint.com to categorize your expenditures so at the end of each month you may see where you spent money and determine what adjustments you should make.
Have a budget, but forget what it looks like? Rest assured, you’re not alone! Most of us put together a budget, stick with it a few months, and then set it aside. Even if you’re still on plan, it’s wise to review your budget to confirm nothing has changed, particularly regarding expense items. You may also find it beneficial to periodically think about money you’ve spent and ask “Has this created value in my life?” If not, identify what you’d like to spend your money on in order to change the answer to that question. (Hint: it’s probably more about experiences than “stuff.”)
Trust me, I get it. Budgets are boring and time consuming. However, having a system in place (and sticking with it!) to manage income and expenses will enable you to focus on more important things during the school year without having to dig yourself out of a financial hole.
3. Increase Your Savings
This last suggestion may seem out of place. However, is there truly a wrong time to try to increase your savings?
With school back in session, it’s likely some of the activities you hopefully enjoyed over the summer, such as vacations, trips to the pool, or dining out for lunch, will come to an end. As a result, when reviewing your budget you may notice some of the expenses you previously accounted for may disappear, thus providing an opportunity for you to increase savings.
For purposes of this discussion, I’m indifferent where you increase your savings. It may be your 401(k), 403(b), IRA, or a non-retirement account (see Automate Savings Beyond Your Retirement Plan for some tips). The point is for you to analyze your spending and use the new school year as a time to slightly increase your savings…even if it’s just a 1% increase to your 401(k) contribution, for example.
Enjoy these last few weeks before the kids go back to school! But be intentional about continuing to set yourself up for financial success. Use these tips as a starting point and you’ll be well on your way!