Extracurricular costs creep

Opinion

It’s getting creepy at this time of year for many families with children.

It’s not just the Halloween marketing arriving weeks in advance; it’s the cost creep many parents experience as their children return to school this month. School fees, supplies and clothes are one set of costs. Another, often larger financial outlay is registration fees and equipment for hockey, riding, figure skating, indoor soccer and many more.

You name the activity; there are likely parents willing to pay thousands for their children to be active outside of house and school.

“It really does creep up as your child gets older,” says Treena Nault, a certified financial planner at IG Private Wealth Management in Winnipeg.

What might be a few hundred dollars — if that — for swimming and skating lessons in early years can gradually creep upward as the participants age and become more involved in whatever activity they choose to pursue.

“You want to support them, but you often don’t realize that $500 for the year can eventually turn into $5,000 or even $15,000,” says Nault, pointing to registration costs for high-level extracurricular sports like hockey.

“It’s hard to plan ahead because you often don’t know where your kid is going to land.”

A recent BMO study found more than a third of parents note activities are causing financial challenges, with 84 per cent adding overall kid-related costs are becoming unmanageable.

“Over nine in 10 people living in the Prairies region struggle with balancing the emotional and financial demands of parenting,” adds Kristen Kennedy, regional vice-president, personal banking, Prairies Central Region at BMO in Winnipeg.

The survey didn’t specifically investigate extracurricular activities costs, but Kennedy, too, cites the cost creep is indeed a real issue for parents as children age.

Other studies have attempted to quantify the dollars involved.

A RBC report from last year on hockey costs estimated families pay on average $4,478 annually or roughly $53,735 total by age 16.

That’s like having to pay for second post-secondary education, only earlier and without the support of the Registered Education Savings Plan and its beneficial grants.

It is indeed a financial grind for parents driven often by social pressures, says a consumer researcher, who has examined extracurricular sports.

“Because unstructured play is no longer part of our culture the same way it was years ago, we’re seeing increased participation in organized sports as a proxy,” says Kaan Yigit, principal at the Strategic Counsel in Toronto.

Its research shows the average cost for annual activities outside school for children ages three to 17 is about $1,600 a year, but the cost is typically much higher for teenagers.

High costs aside, parents recognize the value of these activities, he adds.

“They offer a third place outside of school and the home where kids can exercise their social skills — leadership and life lessons like learning to pick themselves up after they fall.”

Although a financial grind for middle-class parents, for low-income ones, the costs can put activities out of reach — along with the social benefits. Organizations like KidSport Manitoba are pitching in, providing grants to cover some registration fees, but the need outpaces its support.

“It’s grown beyond what we’ve been able to fund-raise for recently,” says Dustin Ehr, KidSport Manitoba co-ordinator.

Demand growth from newcomer families and families living below the low-income cutoff (about $48,000 per year for a family of four in Winnipeg) grows about 20 per cent annually, he adds.

“What we’re really trying to do is get to a spot where we can raise $1.5 million a year just to meet the need.”

Last year, the organization provided $650,000 in funding for families, he says, further noting the grants are fully funded by donations. “We’re here to help kids, but we need financial support to do that.”

Ehr adds access to sports programs is beneficial for low-income families and communities as participation can help prevent youth from engaging in at-risk activities.

While many middle-class and even wealthy families support organizations like KidSport, it’s also important they, too, get finances straight regarding their children’s activities, says a local wealth adviser.

“I can think of a few clients where we allocate funds for this need, so it’s not a big surprise leading to them maxing out the credit cards in September,” says Rob Tetrault, a senior wealth adviser with Canaccord Genuity Corporation in Winnipeg, who often works with high-net worth families.

Like other financial advisers, he points to the need for basic budgeting, potentially creating a separate budget for extracurricular costs and allocating funds monthly to be fully financially prepared when fees come due.

Another good practice is engaging in frank discussions with the family, children included, to ensure fairness and financial sustainability, including setting spending limits and identifying trade-offs.

“Whether we’re talking about dance classes, UberEats spending or travel costs — whatever the heck you’re spending money on — it’s the same debate every month: can we afford it all?” he says, noting some parents pause retirement savings during the most expensive childhood years.

Although costly, often at the expense of other goals, parents seem willing to pay, Yigit says.

“They’re shaking their heads and complaining, saying they cannot believe they’re paying this much, but then, they are paying it at the same time.”

Joel Schlesinger is a Winnipeg-based freelance journalist

joelschles@gmail.com