🏫📓✏️🍎 School daze 🏫📓✏️🍎

Welcome to Young Money, a personal finance newsletter highlighting the best money and economic news from Reuters. 

In this week's edition, we look at some economic trends as back-to-school season ramps up. Plus, I share some expert tips on budgeting as a college student. 

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BACK-TO-SCHOOL BURNOUT 

Every working parent's worst nightmare: Childcare centers across the country are struggling to find enough qualified educators to be fully staffed for back-to-school season, an obstacle that has some schools reducing planned enrollment and cutting back hours. Owners of childcare centers say more workers are quitting and fewer people than usual are applying for open positions.

PHOTO INFO: Rochelle Wilcox delivers cartons of milk to the two-year-olds' classroom, as teacher Steneisha Morehead sits at left, with student Andrew Robair III, Amore Smalls, Roemello Jones, and King Adams, at Wilcox's Academy of Early Learning in New Orleans REUTERS/Marco Bello

Four out of five early childhood educators working at childcare centers said they were understaffed in late June and early July, according to a survey by the National Association for the Education of Young Children (NAEYC). More than one in three respondents said they were thinking about leaving or shutting down their centers this year.

How much are you shelling out for childcare? Is a staffing crunch impacting your childcare plans? Read this by Jonnelle Marte for Reuters. 

TEST OPTIONAL? NOPE

As kids and teachers head back to the classroom, demand for COVID-19 tests is surging. Demand for diagnostic tests has surged nearly six-fold in the past two months, from around 250,000 per day in early July to nearly 1.5 million in mid-August, according to U.S. federal data. The data only tracks diagnostic tests that are run in laboratories.

Tests, however, are in short supply, and insurance doesn't always cover the cost.

I live in New York City which offers free testing, through its NYC Health + Hospitals system. But we could easily spend $80 (or more!) to get our kids tested at one of the private walk-in sites that have popped up in my neighborhood.

Please tell me how you are coping with these costs in the comments below.

SCHOOL SUPPLIES

Strong back-to-school sales could give some U.S. retailers some much-needed momentum after sector shares underperformed in recent months. 

Retailers hope that advance child tax credits and stimulus checks related to the pandemic will provide parents with the extra cash to load up on backpacks and other supplies. Big box retailers such as Walmart and Target have already seen this play out. 

Shoppers may encounter fewer discounts, smaller markdowns and less merchandise in stores.

🎒 Pro-tip: 🎒 If you're buying a backpack, this is one item worth the premium for good quality. Otherwise, you are just going to have to replace it.

THE REUTERS POLL  📊

In our last newsletter, we asked about your spending habits. More than two-thirds of you said that everyday spending — including higher-than-average grocery bills — has taken up the biggest chunk of your budgets so far this year. Some of you also mentioned costly bills for home repair, office supplies and education. 

This week, we want to hear from you again about the cost of COVID testing. Head to Reuters to take the poll and see what others have to say. 

You've got questions. We've got answers! 👶

Q. My husband and I have been discussing how much money he would need to earn for me to take some time off after having kids. Is there a clear number on this? It seems hard to imagine my income disappearing! We live in the New York-area for context. — Anonymous

The first person I turned to is Carrie Schwab-Pomerantz, president and board chair at Charles Schwab Foundation. I've known Carrie for a long time, and she is one of my go-to money gurus.

Here is what she had to say:

How much your husband will need to earn for you to stay at home depends on a variety of factors including how long you might want to stay at home, current and new household expenses for your growing family and what part of the country you live in.

A 2015 study by the US Department of Agriculture found that the national average cost of raising a child until age 17 for middle-income married couples is $233,610, $174,690 for low-income married couples, and $372,210 for high-income married couples.

The pandemic has made clear that childcare is an economic necessity, enabling working parents to fully participate in the economy. The costs of childcare alone can be one of the biggest expenses families face today. According to figures from the Economic Policy Institute, the average cost for childcare is around $17,000 in California, $15,400 in New York and $9,300 in Texas.

Childcare costs also differ by the age of your child, with infant care being more expensive than for older children. Nationally, families making the median income for their state spend on average 18 percent of their income for infant center-based care, and 13 percent for a toddler. Keep in mind these increase over time with inflation, and the pandemic has also increased costs to childcare providers. (Childcare is also in short supply.)

While these figures are just averages, they can serve as a starting point for determining how much income your husband may need to bring in. The bottom line is you need to understand your specific situation and your expenses, and that starts with your new budget.

Carrie offers these five tips to ensure you’re making the right decision for yourself and your family:

• As with any big change, it's important for you to sit down as a couple to talk it through and determine if the financial savings would make up for the loss that will come from a potential decline in income. That’s what you really need to decide as you reprioritize and refine your budget to balance income and expenses. Consider meeting with a financial planner who can act perform a more detailed analysis and explore various “what ifs?”
• Leaving your job means you have less money coming in but your expenses for work —meals out, commuting, apparel etc. — may also drop. On the other hand, you’ll likely have increased expenses with diapers, formula and clothes as well as long-term costs such as music lessons, camp and family vacations. Don’t forget additional costs including for saving for college, increased healthcare costs and making sure you both have enough life insurance to protect your growing family.
• You’ll also want to look carefully at the employee benefits you may be losing. For example, make sure you'll still have adequate health insurance. Flexible spending accounts for dependent care and Health Savings Accounts can still help you save together and save on taxes.
• The long-term implications can be incredibly important, especially when it comes to career development and growth in earnings. If you leave your job, but decide to return to it in several years, you may worry that you’re sacrificing your chances for advancement or that you’ll face a lower salary because of your time away. Keep your job skills up-to-date and try to maintain your professional network. Ask yourself if working part-time, contracting or consulting are options.
• If you’re thinking of taking a considerable amount of time off from work, you should consider how this may affect saving for retirement and other goals. Opening a spousal IRA can be a great way to continue saving without a 401(k). You’ll also want to boost your emergency savings account. As a mother of three adult children, I’m still amazed at the amount and frequency of costs that would constantly pop up when they were younger.

Whether or not you do decide to stay at home ultimately depends on what’s right for your family. As long as you and your partner are supportive of each other — and realistic about the personal as well as the financial and non-financial implications — you and your family may all benefit from this new arrangement.

How much money should I be spending in college on food, events, clothes, etc.? Do you have any budgeting tips? -- Nicholas Y.

College is an excellent time for gaining control over your financial life because, for a lot of young people, it’s when their financial lives actually begin, says Douglas A. Boneparth, CFP® of Bone Fide Wealth, LLC.

Doug's advice? Learn how money comes in and out of your life.

Start by figuring out how much college costs, from tuition to monthly living expenses. Then, figure out how you’re going to pay for these things, from student loans, financial aid, scholarships and parental support, he says.

Write all of this down and use a spreadsheet to stay organized. Lastly, track everything month to month until you can pretty much anticipate what expenses are going to be like. If you can make this exercise a part of your college experience, you will provide yourself with a skill set that will serve you extremely well for the rest of your life.

A$K LAUREN!

Are you trying to buy a home? Need a raise? Or are you wondering if you can afford to get a divorce? Send your money questions to me, and I'll tap my extensive source network and braintrust for expert advice. Submit your questions here.