By Kristin Myers, Editor-in-Chief

ICYMI: Back-To-School Shopping Can Cost Up To 18% More This Year

In case you missed it, inflation will make your back-to-school shopping pricier this year, with school essentials costing up to 18% more than they did in 2021, according to a new analysis from The Balance. The annual rate of inflation rose to 9.1% in June, so whether you are shopping for a child in elementary school, or buying items to head back to the dorms, almost all school essentials are more expensive.

Feeding elementary school children will be a lot pricier, as the cost of lunch meats has risen more than any other item we looked at, jumping 18% since last year. School supplies will set parents back, too: notebooks, paper, pens, and pencils are 13% more expensive compared to last year. You might want to get your shopping done in July so you can take advantage of bargains and seasonal sales and save some money on back-to-school essentials.

And if your child participates in extracurricular activities, expect to spend more there, as well. Sporting equipment has jumped 8%, while musical instruments have risen 5.6% in price.

For anyone buying supplies for a college student (or if you're a college student yourself), heading to campus will be pricier this year, too.

Stocking up on frozen foods for late night study sessions will cost about 18% more, while furniture and bedding for your dorm will set you back an extra 13%. Consider shopping on second-hand sites like Facebook Marketplace and OfferUp to save money on dorm furniture and lower your overall living expenses in college.

In what may come as a surprise, the cost of college tuition is only 2% more expensive than last year, while college housing increased only 1.6%.

-Kristin

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Term of the Day

Education IRA

An education IRA is a tax-advantaged savings account for qualified education expenses. Education IRAs let parents and guardians finance a child's elementary, secondary, and higher education costs via contributions to a trust or custodial account. Education IRAs are also known as "Coverdell Education Savings Accounts," "Coverdells ESAs," or simply "ESAs."

You can make withdrawals tax-free for qualified educational expenses such as tuition and related expenses like books, supplies, and equipment needed for a course. The beneficiary must be under 18 when the account is first opened, and you can make up to $2,000 in contributions each year if you're a single filer with a modified adjusted gross income of up to $110,000. If you're filing a joint return, your income cannot exceed $220,000.

While college savings accounts can potentially reduce your child's eligibility for financial aid, ESAs (and 529 plans) are some of the better options to save for college without jeopardizing financial aid.

Off the Charts

With inflation currently at levels not seen since 1981, a new survey by The Balance found that the grocery store is where most U.S. adults have noticed price increases, followed closely by higher prices at the gas pump.

Nearly 40% said they've seen housing prices increase, while more than 25% have seen inflation in alcohol and recreational drugs. Nearly all respondents—92%—say they're cutting back on expenses as a result of inflation.