Experts suggest considering secondhand school equipment to cut back on costs.
Photo: Unsplash / Kateryna Hliznitsova
The start of the year can be a tough time financially for many families.
Westpac research this week found many people felt stressed about their holiday spending and the costs that come with the start of the year.
Financial coach Shula Newland said it happened every year.
“There’s the hangover of Christmas, where you might have overspent and potentially taken on more debt, especially Afterpays, then you’ve got back-to-school costs.”
She and other financial mentors say you can do a few things, if you’re worried or stuck.
[h[Plan ahead
The ideal scenario is to plan ahead, so you have money set aside.
North Harbour Budgeting Services financial mentor David Verry said, when he worked with families, he put school costs such as uniforms, stationery, devices and school camps into their budgets, and suggested money be saved for them through the year.
Newland agreed.
“Ideally, they would have back-up money for this in savings to access, in an ideal world, but it’s not an ideal world.”
[h[Consider your options
If that was not possible, Verry said there were ways to save on some costs.
A secondhand uniform can be a lot cheaper, as can secondhand laptops.
He said some people could buy secondhand textbooks or use stationery items left over from last year.
Newland said some seemed reluctant to buy secondhand uniforms.
“Sometimes, you can get the generic ones from places like The Warehouse.”
Other school costs
Verry also encouraged people to consider whether a non-compulsory school donation was included in the costs they were facing, and whether they could put that off or not pay it.
“School camps can be expensive – can the cost be staggered or, unfortunately, not go to camp?”
He said, sometimes, people who were on a benefit could ask for more support from Work and Income, or organisations such as the McKenzie Trust could help with things like uniform costs.
Juggle cash flow
Newland and Verry said some juggling might be required to consider what could be put off until later, or what costs could be spread.
Newland said some items around the house could be sold to raise some money.
She said people should be careful about using buy-now-pay-later to shift the cost of purchases.
“It’s probably what a lot of people will look to, but the problem with Afterpay is it’s going to have consequences. There’s a hangover from the Afterpay that is then going to put you on the back foot for the next four pays and so on.
“The ‘Afterpay trap’ traps you into using it constantly, because it’ s so disruptive to your finances.”
Debt consolidation
Westpac said it saw people looking for debt consolidation options to handle debt left over from the holiday period.
Newland said an overdraft could be another option, because it gave people more flexibility about how they repaid it – although, in some cases, the discipline of a loan might be helpful.
“I’d be reluctant to encourage people to use a credit card, unless it’s the last option.”
KiwiSaver
If people are badly in debt arrears, they may be able to get help from their KiwiSaver provider, through a hardship withdrawal.
This needs to be done carefully, because of the impact on your retirement savings.
A spokesperson for Public Trust, a supervisor for many KiwiSaver schemes, said hardship application numbers usually dropped in January.
“Many KiwiSaver members who need support tend to get their applications in before the holidays and scheme providers work hard to process them ahead of the break.
“While we do sometimes see new year applications linked to back-to-school costs, this hasn’t historically been one of the major drivers of hardship withdrawals.”
Get help
People could ask for help, either from their lenders or a financial mentor.
“If people are struggling, let something good come out of it and seek some help,” Newland said. “If you can access EAP funding for financial coaching to put a plan in place, really hit your new year’s resolutions.”
She said people who did not want to pay could also benefit from listening to podcasts or reading about ways to improve their financial situation.
“There are different things they can do to improve their education and motivation – it is changing that mindset – instead of being stuck in this position, thinking ‘what can I do to better myself?'”
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