The cost of prom night rose 5% this year to an average $1,139 per attendee—a staggering sum that should spark frank spending discussions in every household with a teenager.
Only three years ago, the recession was fresh and families were vowing to tighten their belts for good. In that environment, prom spending on everything from dresses and tuxedos to limos and flowers totaled an average $807. That’s a lot. But as the economy improved spending shot passed $1,000 last year before jumping again this spring, according to an annual Visa survey.
Prom spending has been called the new social arms race, as both parents and their teens seek to stand out and choose to spend extravagantly for one evening. “Prom has devolved into a competition to crown the victor of high school society,” Nat Sillin Visa’s head of U.S. Financial Education, said in a release.
The most troubling aspect of this spending free-for-all is the recurring finding that those who can least afford it are spending the most. In households with less than $50,000 of annual income, spending plans this year average $1,245; parents who make more than $50,000 will spend an average of $1,129. Two years ago, Visa found that the top prom spenders had household income under $30,000.
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Prom night is also an opportunity for single parents to spend lavishly on their teens—forking over an average $1,563, which is almost double the $770 that married parents will spend.
What’s going on here? People have not forgotten the lessons of the Great Recession. In a recent Fidelity survey nearly half said that even now they are saving more, reducing debt and building an emergency fund, and 78% of those taking such steps said the measures were part of permanent personal financial strategy.
Yet prom night appears untouchable. Okay, splurging has its place. But keeping up appearances and one-upping the cool kids probably isn’t the wisest choice. Sticking to a budget almost always makes more sense.
Recognizing that prom has become a major expense for teen-bearing households, Visa recently introduced a smartphone Plan it Prom app that lets users make a detailed budget and track spending as they shop. See it on iTunes or at practicalmoneyskills.com.
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To save on the cost of the prom, here are a few tips:
- Shop for formal wear at consignment stores or online. Many outlets rent tuxedos and formal dresses and accessories.
- Have make-up done at a department store’s cosmetics department or enlist a friend to help.
- Split the cost of a limo with other couples, or simply drive.
- Take pre-prom photos yourself and have the kids use cell phones for candid shots at the events.
- Work out a prom budget in advance and set a limit for how much you will contribute. If teens want to spend more, encourage them to earn the money first.
Finally, when peers are overspending it’s a perfect time to do your part to make fiscal responsibility cool. Talk about how much you saved with little real sacrifice—not about how much you spent. Then set the difference aside for something you’ll need in the first semester of college, like books or a new computer. It will only hurt for a day.