Recently my local minor hockey association completed an economic impact study to inform parents how much money to expect to pay each year. The study determined families contribute $4,450 each year to the local community for each child on the ice. While it costs much less for a seven-year-old in her first year of recreational novice hockey than for a midget “A” player, on average, families should plan on spending several thousand dollars to have their kids play hockey. And if you want your child to play at the very highest level of the sport, be prepared to pay a whole lot more.
Traditional cost summaries consider paying for ice time and equipment only. This study included tournament fees, hotels and travel costs as well as the intangibles which are often ignored. Comprehensive planning must include expenses such as gas for attending games, cell phone use, skate sharpening and Tim Horton’s coffee for those early morning ice times. In my financial security planning practice, it is often these hidden expenses that cause clients to ask, “Where does all the money go?”
From baseball, football, figure skating and gymnastics, to sports considered “inexpensive” such as soccer, tennis and swimming, it’s not surprising that many families take on significant debt to have their children in sports. While parents should encourage their child's hobbies and interests, is it really worth the price the whole family pays?
If cash flow from income is not sufficient to cover the costs of kids sports, we need to consider the impact such spending is having on other areas. Every dollar that goes to sports participation is a dollar taken from other areas of variable expenses. The problem becomes serious if a season of high-level basketball or lacrosse is being financed on credit. That $4,000 season of hockey or show jumping will cost an additional $872.77 if paid over a year (assuming a credit card interest of 19.9 per cent). And that’s before late fees and other finance costs are factored in.
If we compound the credit costs over a 10 year minor sports career (from age 5 to 15), we can easily understand that $9,000 of potential savings have gone to service debt. And the picture grows worse if those amounts are not paid off in full each year. But what can be done so kids can have the best experience in the activities they love, without putting the family in debt?
If you read nearly any book on financial planning, three basic principles of wealth building will be common among all of them:
- Work with an advisor you trust
- Set aside three to six months of expenses for emergencies and opportunities
- Pay yourself first
By adopting these three rules, you will greatly increase the likelihood that little Brandon or Brooklyn will be able to suit up for the season without breaking the bank.
As a financial security advisor, my first concern when clients encounter difficulties in sticking with their planning goals is reviewing their spending priorities. Sometimes tracking every dollar spent for a couple of months will indentify hundreds of dollars that just vanish into thin air. A little coordination of shopping habits can save another hundred or two. Rearranging finances to eliminate late payment charges, reduce bank fees, interest and other overhead can often free up another hundred dollars every month.
Without doing anything more than a little research and re-alignment, clients can often find $300 to $500 extra every month that can be put towards other priorities. And of course, starting now will increase the odds that more can be saved for next season. If you want to know more about planning and saving for next year’s sports, or are struggling to make ends meet now, call a professional financial security advisor today.
This information is general in nature, and is intended for informational purposes only. For specific situations you should consult the appropriate legal, accounting or tax advisor.