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Avoid Going Broke Paying for Your Kids’ Activities

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Half a decade ago, kids honed their athletic skills at the neighborhood park. Now, organized sports teams, camps, and clinics have replaced parks and pick-up games. The cost of youth athletics, like many consumer products, has dramatically increased.

In addition to team fees, there is often pressure to buy expensive equipment and to pay for private lessons and expensive camps. Furthermore, the extras — such as out-of-town weekend tournaments, embroidered sweatshirts, team photos, and post-game celebrations — can put an unexpected strain in your pocketbook.

But, the cost of kids' activities does not begin or end with sports. Art, foreign language, dance and music lessons are among the seemingly endless list of extracurricular activities designed to enrich children's lives. And the cost of these activities does not follow the school calendar.

Summertime fun is also a big business: paying for day trips, educational and arts programming, day and overnight camps, pool and club memberships, and other activities can add up, especially in families with multiple children.

So, it is not surprising that many parents struggle with the question of how to provide their children with opportunities to grow physically and emotionally without breaking the bank. Here are a few tips that can help you identify the costs and rein them in.

 Know your budget — Determine how much you can afford to spend on kids' activities. Start by making sure that you have put aside cash for your family's short-term financial stability, roughly enough to cover three to six months of living expenses if a job loss or other family emergency occurs. Also be sure that you are saving enough for retirement and future goals. Then, determine how much of your remaining flexible income you can — and want to — spend on your children's activities.

 Evaluate your goals and expectations for activity — Identify what level of play or involvement makes the most sense given your child's time, talent, and interest, and your budget. For example, an intramural sports team may be more affordable than a traveling team because intramural teams typically have fewer practices, games, and travel expenses, which helps reduce costs.

• Assess an activity's actual cost — Start by talking with the instructor. In addition to a registration fee, there may be other expenses — such as uniforms, equipment, event tickets, travel, and year-end gifts — that are not immediately apparent. Gathering this information will help you understand the activity's total cost and whether it fits your budget before it is too late.

• Prioritize the options — Sit down with your child and list all of the activities he or she is involved in or would like to sign up for. Then, identify which activities are your best investments by asking your child to rank those activities from the ones they like most to those they like least. When your children are old enough to understand the value of a dollar, discuss the amount set aside for their activities and help them decide if they want to participate in one or two more expensive pursuits or several less expensive ones.

• Spend equally or close to it — Budget the same number of dollars to each child's extracurricular activities and stick as close to that number as possible to help prevent feelings of unfairness among siblings.

• Help reduce activity costs — Use parent meetings as an opportunity to ask the group important questions. Do the kids really need new warm-ups every year? Can out-of-town travel be limited to one trip (or none) per season? Can a carpool be organized to help save time and money?

• Share costs — Consider requiring your children to cover a portion of the extracurricular expenses when they are old enough to earn money by working part-time or doing odd jobs. This experience will help them learn to budget their own dollars while helping to lighten your financial load.

Match what you spend

Even though your child's high school graduation date may seem far off, it will arrive sooner than you think. So for every dollar you spend on an extracurricular activity today, invest the same amount for your child's post-secondary education if you are able. Doing so will help ensure that long-term education goals for your child are not compromised by your current investment in their personal development.

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Ameriprise Financial and its representatives do not provide tax or legal advice. Consult with your tax advisor or attorney regarding specific tax issues.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.

This communication is published in the United States for Texas only; and this advisor is licensed only in the states of CA, CO, FL, MO, NC, NM, OK, TX, and VA.

M. Ahmad Adnan, CFP®, CRPC®, RFC®

Financial Advisor

Business Financial Advisor

Ameriprise Financial Services, Inc.

3200 Steck Avenue | Suite 250 | Austin, TX 78757

Phone: 512.213.6400 Ext. 102 | Toll Free: 866.238.4230

Email: masroor.a.adnan@ampf.com

ameripriseadvisors.com/masroor.a.adnan

© 2012 Ameriprise Financial, Inc. All rights reserved.

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