How to avoid back-to-school budget blowouts
As the cost of sending children back to school soars, parents are being urged to use buy-now, pay-later schemes with caution.
Despite services like “afterpay” growing in popularity, financial advisors say they can be debt traps.
Mother Natalie Hommand predicts getting back to school will eat into the family budget.
“We’d be looking at around $2000,” she said.
For the Hammond family paying off a school laptop is among the annual expense.
“$85 a term, over the three year time period,” she added.
Figures compiled the Commonwealth bank reveal the average Victorian household will pay $269 a year on technology, with the entire spend costing $924 a significant jump from $708 in 2017.
“I pay two payments one month, two payments the next. It doesn’t feel like you’ve paid it out straight away,” one mother telling 9News.
“Over the last six months, afterpay has had total sales of 550 million dollars, 17-20 percent of that representative of late fees,” said Ryan Watson, CEO of Tribeca Financial.
Financial advisors say the services can become a trap, with around 80 percent of afterpay customers using it consistently.
“It seems like a good idea at the time, but the key thing is spending within your budget,” Mr Watson added.
The Commonwealth Bank Back to School expense study also found that only one third of parents create a dedicated budget, despite strong recommendations by financial experts.
“Set up an offset account, put money away on a weekly basis,” said Ryan Watson.