If your prom involved borrowing dad's station wagon to drive to the school gym for the dance, you might not recognize the spectacle that the prom has become today. The costs of the dress, tux and dance tickets are often just the beginning, and the average bill for the evening's merriment is growing. According to a recent survey conducted by Visa, families are planning to spend an average of $1,139 to send a teen to prom in 2013. While teens are helping to shoulder a portion of this expense, the survey raises the question of how families can plan responsibly for this frequently costly event.
Single and low-income parents most likely to splurgeIn breaking down average spending by region and family type, the survey uncovered some noteworthy patterns. For instance, single parents are planning to spend much more for prom on average than their married counterparts. For 2013, single parents said they plan on spending an average of $1,563 on the dance. Married parents are planning to spend less than half of that, or $770. Likewise, low-income families plan to spend more than other parents. Visa reports that households earning less than $50,000 a year plan to spend an average of $1,245. Households earning more than that plan to spend slightly less, at $1,129. In terms of regions, Visa discovered families in the Northeast are the biggest spenders, planning for an average of $1,528 in dance expenses. Families in the Midwest are planning to spend less than those of any other region in the country, and less than half of what Northeastern families spend, at $722.
Paying for promWho is paying for all this fun? According to Visa, parents are responsible for most of the expense, although teens are picking up 41 percent of the tab on average. "The prom is an opportunity to teach teens how to budget," said Nat Sillin, head of Visa's U.S. Financial Education, in a written statement. "If they want that sparkling dress, fancy dinner, and limo ride, this is the opportunity to set a budget and save." Given the rising costs of prom, parents may want to sit down with their teens to discuss their expectations and plans for prom well in advance of the big night. In conjunction with its survey, Visa launched a Plan'it Prom budgeting app for Apple and Android devices. Should a teen's dreams outweigh their wallet, the card issuer recommends students consider sharing some expenses with friends or taking their own photos to cut costs.
To help encourage a joint saving effort between teens and their parents, families may even want to consider opening a separate savings account to build prom savings. A savings account from an online bank may be ideal because these accounts are often easy to open and are likely to offer higher interest rates than the accounts offered by traditional banks, according to recent MoneyRates.com research.But whatever approach families take to paying for prom, selective restraint and careful planning may prove essential in preventing the big night from becoming a financial mess.