MONEY

5 Secrets to Saving for the Future While Enjoying Life Now

Piggy bank enjoying life in a field
iStock

A financial planner explains how to prepare for retirement while living the good life now.

Save? Spend? Or both?

In my work with younger clients, that’s one of the main conflicts I see: The desire to prepare for the future and save versus the impulse to live for the present and enjoy earnings now. People know that nobody is promised tomorrow, but they also don’t want to live out their retirement years with limited choices, or none at all.

So how can people strike a successful balance between these seemingly competing desires? Based on my work with financial planning clients, here’s my five-step plan:

  1. Understand your cash flow. I’m going to make a bold statement here: Nothing will affect your financial future more than your ability to understand your household cash flow. If you want more money to save for the future or to spend now, you have to understand your current spending patterns and habits to get there. Check in on your spending weekly; that takes far less time than a monthly review, and it’s easier to catch places you may have spent more than you planned. It’s easy to live lean for a week if you’ve overspent in a previous week. It’s a lot harder to catch up if you’ve been overspending for a month.
  2. Learn to say “no” by deciding on your “yes.” The clearer you are about what you want to do in the short and long term, the easier it is to make spending choices that you’ll be happy with when you look back at them. Before I married the woman who became my wife, I used to feel deprived if we weren’t going out to eat often. On our honeymoon, I discovered that what I really wanted to do was to travel the world with her. Once that became the big yes, I wasn’t depriving myself if I didn’t go out to eat. If I did go out to eat, I was depriving myself of what I really wanted, which was to travel more. That single idea helped me change my habits entirely and build up the money we needed to take a big trip every year.
  3. Limit your monthly bills. Eric Kies talks about Money Past, Money Present, and Money Future in his First Step Cash Management system. Money Past is all of the money you’ve agreed to spend at the beginning of the month — things like rent, utilities, and student loan payments. While buying a new car may not seem like a big deal if you think you can afford it, adding on a car loan to your Money Past comes with a major tradeoff: It limits your day-to-day spending (Money Present), and it cuts into your ability to save for the future as well (your Money Future). Be careful; I regularly see young couples adding to their Money Past bucket, limiting their present and future spending choices.
  4. Automate your savings for present and future goals. Chances are you get paid by direct deposit, and it’s easy to direct funds into multiple accounts. Beyond your basic emergency fund, I’ve seen clients have a lot of success in setting up multiple savings accounts to have balances grow for specific goals (a trip to Europe, for example, or a new car). This allows you to see the specific progress you’re making. The same concept applies for retirement plans at work. If you can save that money automatically before it reaches your bank account, you’re far more likely to continue saving those funds in the future and even to increase your contributions over time.
  5. Plan for spontaneity. This may sound contradictory, but I think it’s essential. Many people I’ve spoken to resist tracking their spending because it feels constraining. A good solution to this is to build in money that is purely for spontaneous spending. If you know there’s money in your budget that is there for the sole purpose of spending it, it protects the money that you’re saving into other accounts by providing an outlet for a spur-of-the-moment decision.

Follow these suggestions and you’ll soon find you have money for both your current needs and your long-term goals.

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H. Jude Boudreaux, CFP, is the founder of Upperline Financial Planning, a fee-only financial planning firm based in New Orleans. He is an adjunct professor at Loyola University New Orleans, a past president of the Financial Planning Association‘s NexGen community, and an advocate for new and alternative business models for the financial planning industry.

 

MONEY early retirement

How to Figure Out Your Real Cost of Living in Retirement

Your retirement savings “number” gets a lot of press. But your expense number is even more important, especially if you retire early.

Many financial advisors say you’ll need some fixed percent of your previous income in retirement—often 80% is considered “reasonable.” But that’s nonsense. What it costs you to live in retirement, or before, is not a function of how much you make! There are millionaires who live like college students, and college students who live like millionaires—for a while anyway, on credit.

Where are you on the lifestyle spectrum? To get serious about retirement planning, you’ve got to have an accurate picture of your monthly living expenses. You need to know your bare minimum or fixed expenses, your average or normal expenses, and your ideal expenses—allowing for some luxuries.

Spending is a personal area, so everyone’s pattern will be different. But on average the first phase of retirement is when you’re likely to spend the most, since you’re finally free to travel, dine out and enjoy other leisure activities. Among older Americans, average annual expenditures peaked at about $61,000 for those in the 45-54 year age range, according to the latest data from the Consumer Expenditures Survey. By ages 55-64, spending dipped to $56,000, and down again to $46,000 between ages 65 to 74. At 75 years and older, average spending was only $34,000, though health care expenses may spike up for many.

We are in our mid-50’s and live a modest but comfortable lifestyle, which currently costs us about $4,500 a month, in addition to housing. We rent a smaller, two-bedroom house (about $1,500 monthly), and share a single gas-efficient car ($370 a month, including gas, insurance and repairs). But we eat well, own some nice things, and have plenty of fun—mostly free or cheap outdoor activities. And our living expenses run about 25% above the national average for our age.

This past year we moved to our ideal retirement location. So we’ve had to spend a bit more than usual due to the relocation. But these have generally been one-time home or personal expenses—not recurring expenses that would inflate our lifestyle forever more.

Health care costs remain a concern, since we are too young for Medicare. Fortunately, I was able to get coverage through my wife’s retirement health plan, thanks to her former career as a public school teacher; we pay $1,100 a month on average for premiums, co-pays, deductibles and the like. That’s one of our larger expenses, but it is manageable, for now. (For more on our spending in early retirement, see my blog here.)

If you’re willing to live in a cheaper area, buy used, and eat simpler, you can probably live on much less than we do. On the other hand, if manicured retirement communities, luxury vehicles, and international travel are your idea of retirement living, you could need quite a bit more. In most surveys of consumer expenses, the biggest items are housing and transportation. So, if you want to optimize your retirement lifestyle, start with your home and vehicle.

Without a complete understanding of how much it costs you to live, your retirement planning can’t get off the ground. The best way to determine your expenses is to actually keep track of them for at least a year, as you approach retirement. You can record expenses using dedicated tools like Quicken on the desktop or Mint on the web, or you can use an electronic spreadsheet or paper journal.

As an engineer, tracking expenses was second nature to me. But what if you aren’t the detail-oriented type? You could estimate your expenses based on those government averages above, but in the long run you’ll need more accuracy to be confident about your own situation.

One approach is to sit down with your checking and credit card statements, and use them to estimate a monthly or annual amount for each important budget category. You can start with this short list: housing, transportation, food, health care, entertainment, and personal expenses. Just don’t forget those less-frequent items such as home and auto repairs, vacations, and property taxes!

Your retirement savings “number” gets a lot of press. But even more important than that is your expense number. Understanding your expenses is a critical stepping stone to building wealth and retiring comfortably. If you still don’t know where your money goes, why not get started today?

Darrow Kirkpatrick is a software engineer and author who lived frugally, invested successfully, and retired in 2011 at age 50. He writes regularly about saving, investing and retiring on his blog CanIRetireYet.com. This column appears monthly.

MONEY consumer psychology

Hey, Impulse Spenders: Here’s a Solution to Your Bad Habit

shopping bags
Martin Barraud—Getty Images

If you make too many impulse purchases and later regret them, there is a simple cure: gratitude.

A study recently published in Psychological Science shows that an attitude of gratitude tempers impulsive urges. In the study, participants had the option of receiving $54 now or $80 in a month. The researchers then induced moods of happiness, neutrality, or gratitude. Participants in the happy or neutral groups preferred the smaller sum immediately—the typical response in delayed gratification experiments.

The surprise came from those who felt grateful. They preferred to wait for the larger sum, which is the smarter, if less immediately gratifying, option.

The authors don’t say why gratitude forestalls impulsiveness, but their findings make sense within the context of my own research. I’ve found that people typically purchase impulsively for one of two reasons. They do so 1) to counteract a sense of emptiness, boredom, or void in their lives; or 2) because they are not fully focused when making a purchase. Gratitude can be the antidote in both of these scenarios.

Fill the Void
Impulsively snapping up a bargain or a trinket (or more) can provide an emotional boost, even a genuine momentary thrill. A void you feel—which can range in magnitude from simple boredom to a deep emotional need for human connection—is temporarily filled in the act. Sometimes the pleasure of some new “find,” or just the distraction of the transaction is subconsciously more what people are shopping for than whatever it is that’s actually being purchased.

People that “fill up” with impulsive purchases in this manner are often thought to be motivated by simple greed. What I’ve found, though, is that the catalyst is not so much greed or materialism, but emotional relief. Momentary lapses of impulse control are frequently fueled by an urge to feel something different—to get out of a funk and change your mood.

Feelings of gratitude, not just for possessions, but for almost anything—a friendly encounter, a cool breeze, a tasty lunch, a nice text from your kid, a beautiful landscape—are nourishing. It’s harder to feel a void or sense of emptiness when you pause and notice how much you have. It makes sense that everyone, not just shoppers, exhibit greater levels of impulse control when they feel thankful.

Get in Focus
Consumers’ minds nowadays are drawn in different directions by nonstop multitasking, and anxiety and sleep deficiencies are on the rise as a result. Focused decision-making, particularly on seemingly non-urgent tasks such as shopping, is on the decline, as is truly focusing on anything, it seems. No wonder I increasingly hear, “What was I thinking when I bought this?” from shoppers I interview. An exhausted, distracted brain pays less attention to everything and therefore has less bandwidth to forestall impulsive purchasing.

The calming focus of gratitude can help. A few seconds of thankfulness is not only a mood elevator, it’s a fast and simple mindfulness exercise that improves focus and can stave off mindless, impulsive spending.

But if you’re trying to rein in impulse spending, wouldn’t it make more sense to simply force yourself to pay closer attention to purchases, rather than trying to focus on feelings of gratitude? Well, no. Focusing on purchases is actually harder than it seems. Why? It’s boring when compared to the thrill of the purchase, and therefore consumers are apt to forget they’re supposed to be mindful and think twice about what they’re buying.

Also, paying close attention to purchases comes with the possibility of arousing negative emotions—feelings concerning problems with debt or budgeting, or pressures about responsibility and what you should or should not do. Our self-protective, irrational brains are likely to look for an easy “out” to get rid of these bad feelings, ironically often by simply losing focus and doing things mindlessly, impulsively. That’s why so many consumers experience a mismatch between their good intentions and ultimate actions when it comes to shopping.

Gratitude is a gentle way to force focus, and it creates a sense of abundance that transcends the need for a momentary shopping boost. As a bonus, there are lots of other benefits to feeling and expressing gratitude—most notably, happiness.

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Kit Yarrow, Ph.D., is a consumer psychologist who is obsessed with all things related to how, when and why we shop and buy. She conducts research through her professorship at Golden Gate University and shares her findings in speeches, consulting work, and her books, Decoding the New Consumer Mind and Gen BuY.

MONEY Aging

Why It’s Never Too Late to Fix Your Finances

Those over 50 may become less sharp, but a little personal finance instruction can make a huge difference in their financial security.

When we speak of financial education today, in most cases we are referring to the broad, global effort to teach students how to stay out of debt and begin to save for retirement. But what about those who already have debts and may already be retired?

Clearly, we should teach them too. It’s never too late to improve your financial standing—and unlike financial education among the young, elders exposed to basic planning strategies adopt them readily, new research shows. This underscores the sweeping need for programs that address financial understanding at all ages and why even folks well past their saving years may still have time to get it right.

Last year, AARP Foundation and Charles Schwab Foundation completed a 15-month trial of financial instruction designed specifically for low-income people past the age of 50. After just six months of training, the subjects exhibited significant improvement in things like budgeting, saving, investing, managing debt and goal setting.

For example, only 42% of participants had at least one financial goal at the start of the program and 63% had set at least one financial goal after six months in the program. The rate of those spending more than they earned fell by a third and 35% had paid down debt. Many had begun to track spending and stop overdrawing accounts and paying late fees.

Participants saying they were “very worried” about money dropped to 14% from 22%; those saying they were “not very/not at all worried” jumped to 42% from 34%. These are remarkable gains in such a short period and among such a generally disadvantaged group. Half in the group had saved less than $10,000 and average income was about $35,000.

The research suggests that the 50-plus set can make big strides toward a secure financial life with some instruction. It jibes with other reports illustrating the value of financial inclusion for the unbanked millions and how a higher degree of personal financial ability might even save our way of life for everyone.

But let’s be clear: this isn’t just a way for low-income households to improve their lot. Plenty middle-class and even affluent households have a savings problem. And as we age we tend to make poorer money decisions regardless of our net worth. So it’s nice to see the financial education effort move beyond the classroom—increasingly to places of employment as part of benefits counseling and now, maybe, to community centers and retirement villages where willing adults can find it’s never too late to learn something new and feel good about their finances.

MONEY My Money Story

LISTEN: I Got Paid to Iron Shirts While a Stranger Watched

My Money Story is a biweekly podcast. We tell one person's story of overcoming an obstacle (big or small) to achieve a dream - or simply pay the rent.

Julie Staadecker was 20-years-old, studying at Boston University and broke. To make some extra cash, she would pick up odd jobs — like catering or moving furniture. One day she stumbled across a job asking for a shirt iron-er, which turned out to be the most bizarre odd job she’s ever had.

Music: “Try This On For Size,” by Brian Wayy and “Hipnotyzed,” by Kojo Linder

MONEY Budgeting

3 Ways to Inflation-Proof Your Life

140710_HO_Inflation_1
Jason Hindley

The official inflation rate is low, but your personal CPI may be high. Keep it grounded with these moves.

Since the Great Recession, inflation has been unusually low, inching along at well below the 3% historical average. And over the past 12 months, the consumer price index has clocked in at a ho-hum 2.1%. But you are not the U.S. economy, and the costs of being you haven’t stagnated.

In some cases, that’s a good thing. If you’re in the market for a new TV or computer, for instance, you’ll pay dramatically less than you would have five years ago (see chart, below). Yet during the same period, prices of many of the biggest and most common expenses families pay, from child care and health care to key grocery items, have shot up. Meanwhile, in real terms, salaries are stuck in molas­ses, so consumers have roughly the same income as they did before Lehman Brothers collapsed.

Use these moves to keep price increases from eroding your paycheck.

Costs of Raising Junior

Strategy: Let Uncle Sam help. Diapers, summer camp, and orthodontia may be budget killers. But the biggest strain on parents comes from two expenses: child care (up from an average $87 a week in 1985, adjusted for inflation, to $148 now) and college (tuition and fees for state schools: up 27% in real terms since 2008).

Tax breaks can help you reduce those costs. Got children under 13? Sign up at work for a dependent-care flexible spending account to use pretax dollars to pay for up to $5,000 of child-care bills, says J.J. Burns, a Melville, N.Y., financial planner. That saves you up to $1,400 in the 28% bracket.

Your company doesn’t offer the FSA, or your costs exceed the limit? Claim the child-care tax credit on your 1040 for up to $3,000 in bills for one kid, $6,000 for two. A married couple filing jointly with adjusted gross income (AGI) over $43,000 can write off 20% of bills up to these amounts.

As for college, saving via your state’s 529 plan may put money back in your pocket, says Savingforcollege.com founder Joseph Hurley; check “What’s the Best 529 Plan for Me?” to see if that’s true for you. Contributions grow tax-free and are fully or partly deductible in 34 states and D.C. (withdrawals are tax-free in every state). Plus, once your child is in school, you may qualify for the American Opportunity Tax Credit on tuition and fees worth as much as $2,500 and a deduction of up to $2,500 on student-loan interest.

Everyday Expenses

Strategy: Find a cheaper substitute. If you grilled hamburgers this Fourth of July, then you already know about skyrocketing meat prices. And that’s not all: The prices of car insurance, butter, milk, and eggs have all risen at double or triple the CPI. For gas, make that sevenfold.

Solution? Substitute a lower-cost item or supplier that can fill the same need. Trade T-bones for chicken breasts—the price of which has tracked inflation the past five years. Reach for a glass of wine (down 2% over the past five years) instead of a bottle of beer (up 9%).Then take the strategy wider. Carpool to work or use public transit to save on gas. And shop around for a cheaper auto insurer.

Health Care Costs

Strategy: Comparison-shop. Workers’ contributions to health care premiums have climbed 26% in real terms since 2008, based on data from the Kaiser Family Foundation. Prescription: Compare prices, which vary widely even in-network for doctors, services, and drugs. By logging on to your insurer’s web tool you can save thousands on MRI and CT scans, specialists, and physical therapy.

Also, to avoid big bills later, take advantage of free preventive care like physicals, which most plans must now offer, says Katy Votava, president of Goodcare.com, a health-plan consultancy. You can’t do much better than paying zero.

What's cheaper

MONEY Careers

These 2 Key Moves Will Help You Land Your Dream Second Career

Get the inside scoop on your future job and adjust your spending to match your life goals.

If you’re of a certain age, you may remember the Doris Day song, Que Sera, Sera? (Whatever Will Be, Will Be). It went like this:

When I was just a child in school,
I asked my teacher, “What will I try?”
Should I paint pictures, should I sing songs?”
This was her wise reply: “Que sera, sera. Whatever will be, will be.
The future’s not ours to see. Que sera, sera.”

These days, many boomers are having their own Que Sera Sera moment, wondering “what they will try” next and whether they can afford to do it in “unretirement.” Start a company? Continue working full-time, maybe at a different company or industry? Shift to part-time or contract work?

Many want to keep earning an income—from something that’s meaningful. In other words, doing well personally and doing good socially.

(MORE: Plotting Your Next Move for ‘Unretirement’)

Don’t Listen to the Teacher

But, as Harvard University psychology professor and Stumbling on Happiness author Daniel Gilbert observes, the Que Sera Sera teacher’s reply isn’t that wise or helpful. Instead, he recommends exploring your possibilities by learning from surrogates: people engaged in something that attracts you.

“Teachers, neighbors, coworkers, parents, friends, lovers, children, uncles, cousins, coaches, cabdrivers, bartenders, hairstylists, dentists, advertisers — each of these folks has something to say about what it would be like to live in this future rather than that one, and at any point in time we can be fairly sure that one of these folks has actually had the experience that we are merely contemplating,” Gilbert writes in Stumbling on Happiness.

Then, if you determine that your next move will mean an income cut, I believe you should start getting more frugal, so you can enjoy your new life without feeling squeezed.

Wise Words From A Transition Pro

To learn more about major midlife transitions, I reached out to Harlan Limpert, the 64-year-old Chief Operating Officer for the Unitarian Universalist Association, the church group’s umbrella organization, and former head of human resources at Target.

Due to his career path, many people have informally consulted with Limpert over the years for advice about finding meaning and purpose through work (full-time or part-time).

Limpert worked in HR for two years at Target in Minneapolis after college in the early 1970s. It was a good job, he says, but he felt it didn’t offer enough in terms of life’s meaning. So he went to seminary at Starr King School for the Ministry for Unitarian Universalists in Berkeley, Calif. and then became a chaplain at St. Elizabeth’s, the mental hospital in Washington, D.C.

(MORE: Busting the Myths About Work in Retirement)

Although he found chaplaincy rewarding, Limpert felt it wasn’t the right career for him and, after two years, headed back to Target. While at Target, Limpert stayed engaged with a local congregation. And in 2001, at 51, he quit the HR job to become the Unitarian Universalist Association’s director of lay leadership development—a shift that took advantage of his human resource skills but also came with a significant cut in pay.

These days, Limpert spends three weeks a month at its headquarters in Boston and one week back home in Minneapolis. “It’s the perfect job for me,” he says.

Limpert’s 2 Rules to Follow

In a wide-ranging conversation, Limpert stressed two points for anyone thinking through a major transition:

First, investigate carefully any potential job or career options before leaping into a new endeavor. “The romanticism of the ‘other’ is a huge mistake people make,” he cautions.

(MORE: 4 Tips to Play the Long Game in Work and Life)

In particular, if you’ve labored in the private sector, don’t put on rose-colored glasses about jobs in the nonprofit world. “People think business is hard and bad and the nonprofit world is good and easy,” he says. “Well, no. The question to pursue is, ‘How can I get a realistic picture of what my next life might be?’”

Do your research. Get involved. And, as Gilbert emphasized and Limpert reinforced, talk to lots of people engaged in the kind of job you believe will give you greater emotional and mental satisfaction and financial security.

Limpert’s second major point: A frugal lifestyle will help you fund and succeed at a major transition.

Many unretirement jobs come with a reduced salary; it’s a typical trade-off for the greater flexibility that comes with part-time or contract work. And full-time employees often take a hit if they move from the for-profit sector to the nonprofit world.

The career switch was financially easy for Limpert because he and his wife have always lived relatively modestly, focusing their spending on their children’s education and travel rather than on a big house or luxury cars. By living frugally, “you’re in a position to accept a reduced income,” says Limpert. “You have the economic flexibility to do what you want.”

Frugality Isn’t Pennypinching

Of course, mention frugality or thrift and words like stingy, cheap and hoarding quickly some to mind. Big mistake.

David Starr Jordan, the founding president of Stanford University, rightly noted in a 1915 talk that thrift “does not involve stinginess, which is an abuse of thrift, nor does it require that each item of savings should be financial investments; the money that is spent on the education of one’s self or of one’s family, in travel, in music, in art, or in helpfulness to others, if it brings real returns in personal development or in a better understanding of the world we live in, is in accordance with the spirit of thrift.”

In today’s world, many of my fellow boomers know they wrongly equated the good life with owning lots of stuff. In our hearts, we’ve always known that what gives us genuine satisfaction are experiences and creativity; family and community; a sense of purpose and a spirit of generosity.

Thrift is essentially a mindset for trying to match your spending with your values. “Cheapskates aim to buy as much as they can for as little as possible, not caring much for the quality or environmental or ethical virtues of the items they’re consuming,” Farhad Manjoo wrote when he was Slate’s technology columnist. “To be frugal, on the other hand, is to consider the full ramifications of every purchase.”

Okay, what if you’ve been more spendthrift than thrifty? In that case, work on creating a more frugal lifestyle into your unretirement planning while you’re investigating options for meaningful work.

How to Become More Frugal

The two efforts go hand in hand. There is no shortage of resources for practical suggestions.

I recommend Mark Miller’s The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living and Kerry Hannon’s What’s Next?: Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond. And, if you’ll permit me, I’d also suggest reading my book, The New Frugality.

Websites like The Simple Dollar and comprehensive, free or low-cost online financial calculators such as those at Analyzenow.com offer the kind of frugal information that can help turn the dream of an encore job into a financially-realistic pursuit.

Simply put, the payoff from pursuing conversations with job surrogates and adopting a frugal approach to money in your unretirement planning is potentially huge—financially and emotionally.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the forthcoming Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life. He writes about Unretirement twice a month, focusing on the personal finance and entrepreneurial start-up implications and the lessons people learn as they search for meaning and income. Tell him about your experiences so he can address your questions in future columns. Send your queries to him at cfarrell@mpr.org. His twitter address is @cfarrellecon.

MONEY Kids and Money

What It Costs to Raise a Wimbledon Champion

Does your kid hope to be the next Roger Federer? Start saving money now. Steve Bardens—Getty Images

Want your kid to win Wimbledon? Start shelling out $30,000 a year.

On July 1, two-time Wimbledon champ Rafael Nadal, age 28, was bested by 19-year-old Australian player Nick Kyrgios—the youngest man in the draw, and the first teen in nearly a decade to knock off a No. 1-ranked player at a Grand Slam tournament.

If that youthful feat fuels your kid’s dream of tennis stardom, then get ready to open your wallet. In the United States, families of elite tennis players easily spend $30,000 a year so their kids can compete on the national level, says Tim Donovan, founder of Donovan Tennis Strategies, a college recruiting consulting group. That can start as early as age 11 or 12. At the high end, Donovan says, some parents spend $100,000 a year.

On what, you might ask. Here’s the breakdown:

  • Court time. Practice makes perfect, but practice can be expensive, especially if you need to practice indoors in the winter. In Boston, where Donovan is based, court time costs about $45 an hour. In New York City, court time can run over $100 an hour.
  • Training. Figure $4,500 to $5,000 a year for private lessons, plus $7,000 to $8,000 for group lessons—in addition to the aforementioned court fees to practice on your own.
  • Tournaments. National tournament entrance fees run about $150. Plus, you have to travel to get there. Serious players will go to 20 tournaments a year. Donovan estimates that two-thirds of the tournaments might be a few hours away, but elite athletes will need to fly to national events six or seven times a year. Want to bring your coach with you? Add another $300 a day, plus expenses.
  • School. You’ve already racked up $30,000 in bills. But if your kid is really serious, you might also spring for a special tennis academy. Full-time boarding school tuition at Florida’s IMG Academy costs $71,400 a year.

So what’s the return on investment? While most parents don’t expect to see their kids at Wimbledon, many still hope that tennis will open doors when it comes time to apply to college. But the reality is that athletic scholarships are few and far between. In 2011-2012, only 0.8% of undergrads won any kind of athletic scholarship, says Mark Kantrowitz, publisher of Edvisors.com.

Opportunities are particularly limited for boys. Donovan notes that because of Title IX—which requires that schools provide an equal number of scholarships for men and women—a Division I college with a football program might offer eight full tennis scholarships for women, but only half as many for men, because male scholarships need to go to the football players.

Bottom line: If you spend $30,000 a year hoping your tennis star will go to college for free, you’ll probably be disappointed with your ROI.

“Recipients of athletic scholarships graduate with somewhat less debt than other students but not significantly so,” says Kantrowitz. “The main benefit of athletic scholarships is providing access to higher-cost colleges without increasing costs, moreso than reducing the cost of a college education.”

That’s where Donovan comes in: For $3,500 to $10,000, Donovan Tennis Strategies provides different levels of assistance with the college application process. Oftentimes, Donovan’s clients are able to pay full tuition but want additional help leveraging tennis to get their kids into better (and more expensive) schools.

The strategy can pay off. According to Donovan, recruited athletes have a 48% higher chance of admission, sometimes even with SAT scores that are more than 300 points lower than those of non-athletes. “The coach can go in and significantly advocate for somebody and change the outcome,” he says.

So if you’re a parent to a budding tennis star, can you foster his or her talent for less? The IMG Academy does offer scholarships to promising young athletes whose parents can’t pay full freight, and the United States Tennis Association offers some grants and funding. But ultimately, players need to log hours on the court to get good, and that costs money.

“The more you’re playing, the better you’re going to be,” Donovan says. “That’s pretty well documented … and that adds up over time.”

MONEY Food & Drink

The Skyrocketing Cost of Your July 4th Barbecue

Dollar sign drawn out of sparklers
fStop—Alamy

Drought and disease are driving high prices on hamburgers, lemonade, and fruit salad.

If you’re the person preparing the July 4th barbecue, prepare yourself for sticker shock at the grocery store. Prices for grocery store food items are up 2.7% compared to last year, according to the U.S. Department of Agriculture’s latest Food Price Outlook. But prices are even higher on some Fourth of July favorites—like beef, up more than 10% over last year.

What’s going on? California, an agricultural heavyweight, is facing one of the most severe droughts on record. Meanwhile, disease is attacking some popular produce. Here’s what that could mean for your holiday meal.

Hamburgers. Grocery stores are pricing most retail beef at record-high prices, up 10.7% compared to last year. That’s because over the past few years, droughts have shrunk cattle herds to their lowest sizes since 1951. This year’s drought conditions in Texas and Oklahoma haven’t helped matters.

Barbecued pork chops. The other white meat isn’t cheap either. Faced with the soaring cost of beef, some customers have switched to pork, driving prices up 12.2% since last year. Also, piglets are dying from porcine epidemic diarrhea virus. The good news? The hogs are fatter than they were last year, so the USDA predicts that prices might stabilize.

Hot dogs and deli sandwiches. Other meats cost 3.3% more than last year. Again, that’s probably because consumers are switching from more expensive choices like beef and pork. What it means for you: Alternatives are pricier than they were last year, but they may still be the best deal on meat.

Lemonade. Planning to make some fresh-squeezed lemonade? You might want to think again. Citrus prices are up a whopping 22.5% this year, thanks to a rough winter freeze in California and a deadly citrus disease outbreak in Florida. Switch to a mix and save a bundle–prices for sugars and sweets have fallen 1.5%.

Fruit salad. As of now, fresh fruit prices have risen 7.3% (mostly due to high citrus prices). But that might change by your Labor Day picnic. The USDA predicts fresh fruit prices will jump 5% to 6% later this year, so enjoy your fruit salad while it lasts.

Looking to trim your meat budget this barbecue season? Try these five tips.

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