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Back-to-school season: Resist the tyranny of overspending

A few years back, one of our sons received a list of required school supplies that specified not only a certain number of Duo-Tangs, but also the colours they had to be.

One was purple, which is a rare colour in the Duo-Tang universe. We checked several stores and ultimately gave up. There were zero repercussions for our family – no scolding for our son at school, no rips in the time-space continuum. Duo-Tangs that were white, black or blue sufficed.

As we head toward summer's end, I invite all parents to push back against the tyranny of the back-to-school season. Skip an item or two on the list your child gets from his or her school. Tell the clothing store offering the "buy one, get one at half price" deals that, thanks very much, you'll just buy the one shirt or pair of pants. Resist all pressure to "upgrade" perfectly good computers or smartphones.

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One of the reasons we have so much trouble saving money is that everyday living is getting more expensive all the time. Consider the back-to-school phenomenon, which is now of such importance that consulting firms and banks pay for polls to measure how much money parents and students will spend.

Bank of Montreal says its recent survey shows that back-to-school spending this year will rise in line with general retail spending at about 3.5 to 4 per cent. That's probably double the rate at which those of us lucky enough to get pay increases are seeing. The consultants at Ernst & Young found that people expect to lay out the same amount on clothing, shoes and stationery as they did in 2013, when spending rose 3.7 per cent over the 2012 level.

Parents, you can't avoid back-to-school spending. Supplies such as lined paper, pens and binders or Duo-Tangs are obviously essential. Clothes that fit your kids in the spring may look laughably small today. Computers and even smartphones aren't a luxury – they're a productivity tool.

But we have to try to moderate this sort of "event spending." Christmas is the king of events that generate big spending. But it has in recent years been joined by Black Friday, the U.S. post-Thanksgiving shopping frenzy that has been adopted by some Canadian retailers, and Halloween, which the Retail Council of Canada has said is second to Christmas as a spending event. The retail council ranks back-to-school third in spending.

The more we spend on these occasions, the more retailers exploit them with sales and promotions to further drive sales. This in turn entrenches the idea that sending children back to school or out trick-or-treating for Halloween should involve lots of shopping and spending.

The irony in all of this is that the cost of a lot of the stuff we're buying for these events costs less than it did years back. My colleague Marina Strauss reported earlier this year that clothing prices had fallen 17.8 per cent from 2002, while overall consumer prices (excluding volatile categories such as food and energy) rose 21 per cent. The cost of technology is also falling, including PCs, laptops, tablets and smartphones.

This stuff is getting cheaper, but we're buying more of it. How many of you own three or four of the following: a desktop PC, a laptop, a tablet and a smartphone? Demand for all these products is stoked partly by their usefulness, partly by their seductive design and partly through a product development cycle that presents us with updated, improved models at regular intervals. Apple's new iPhone 6 could be introduced just after the beginning of the school year.

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Back-to-school preparations are an ideal time to push back against event-spending because you can do some good for your own finances while also showing your children how to be informed consumers.

Teach them that there are certainly times of the year that we need to spend money – the holiday season, just before school resumes and maybe even Halloween. But we should try to spend intelligently. For example, make separate lists of needs and wants, and get to the wants only after the needs are bought with money to spare.

Also, it's okay not to buy everything The Man tells you to. Remember those purple Duo-Tangs.

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About the Author
Personal Finance Columnist

Rob Carrick has been writing about personal finance, business and economics for close to 20 years. He joined The Globe and Mail in late 1996 as an investment reporter and has been personal finance columnist since November 1998.Rob's personal finance columns appear in The Globe on Tuesday and Thursday, and his Portfolio Strategy column for investors appears on Saturday. More

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