School's out for summer, but inflation is still testing American's wallets: 30% of parents expect to pay more than $500 on back to school supplies this year, and are shopping at discount or dollar stores (40%) to save money, according to new research from Empower, a leader in financial planning, investing and advice.

Parents say they'll spend the most on clothes (84%), ahead of computers/electronics (29%), and books (70%). One in two respondents (49%) say extracurricular activities like sports are a major ongoing expense throughout the school year, and despite rising costs, nearly a third (30%) will continue to prioritize these activities for their children.

Nearly all (85%) surveyed say inflation is impacting their back-to-school spending. To navigate increased costs, parents say they're cutting back on non-essential expenses (43%), shopping during sales (48%), and 1 in 4 (26%) are buying in bulk. Before hitting stores, 40% of shoppers searched for deals and discounts on Meta, and 10% looked on TikTok.

Outside the classroom, money lessons are in session: on average, respondents say they give kids a weekly allowance of $5 to teach about needs versus wants and setting a budget. When it comes to hopes for their children's financial futures, 63% say the financial freedom to enjoy life is at the top of the curriculum.

More key findings:

• The cost of living for college students: Beyond tuition, college students' groceries (54%), dining hall meals (52%), gas (50%), and parking fees (30%) ring in as their biggest ongoing expenses.

• Scrolling for savings: Social media is a popular source for money-saving hacks with 3 in 10 college students turning to Reddit, followed by YouTube (25%), TikTok (24%), and Instagram (23%).

• Studying the art of AI: Only 14% of students say they use artificial intelligence (AI) to write papers or solve math equations. Instead, they turn to AI technology for idea generation and brainstorming (37%) and research (19%), like money tips.

• A hefty price tag: College students who spent over $500 on back-to-school supplies were 60% more likely to live at home than in a dorm or an apartment.

Before back-to-school shopping, it's important to have a financial plan in place. Keith D. Jones, CFPâ, Senior Financial Advisor at Empower, suggests going the extra mile (for extra credit) and sticking to a budget.

Jones says, "Back-to-school spending, like anything else, can be a bit unpredictable. At the start of the year, create a separate savings goal for school essentials – using the total amount you spent last year as a guide – just like you would for other expenses like car payments or holiday gifts. Saving a little each month, even if incremental, can go a long way and help reduce stress when school starts back up."

The full report can be found on The Currency™. Visit Empower.com to schedule an appointment with a skilled, fee-based financial professional or sign up for its free financial tools.

*ABOUT THE STUDY
Survey of 205 college students and 857 parents of K-12 students, conducted in June 2023by Fractl on behalf of Empower. All data referenced in the article is from this survey.