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Kids needs tax education

News Herald – Juliann Talkington

Juliann

Regardless of whether you believe taxes are crucial and helpful or unnecessary and unfair, it is important that your kids understand the concept of taxation, how tax money is collected and used, and what they can do to influence tax policy.

Here are a few kid friendly facts you can share with your children.

There are a lot of taxes in the U.S.
Individuals are taxed on property, purchases, income, wages, facilities use (tolls), and dying (death tax). Companies pay duties, tariffs, fees, registrations, and employment taxes. They pass these extra costs onto consumers as higher prices, which means individuals ultimately pay for business taxes.

U.S. taxpayers have little say on how tax money is spent.
Once the taxes are collected by a taxing agency, taxpayers have little control on how the money is allocated. As a result, it is critical that voters consider all tax referenda carefully. If a taxpayer does not like a tax he/she can circulate a petition to have the tax recalled, run for office, and/or work to get different politicians elected.

Taxes increase the power of the government.
Tax revenues give government entities control over large budgets, which can create problems with corruption as companies and individuals lobby to obtain projects bid by the government.

Taxes fund a wide variety of programs.
Taxes are used to pay for everything from roads and bridges to special projects like studying methane emission from dairy cows.

Private sector worker taxes pay for government jobs.
When someone works for a public school, a public college or university, the TSA, the military, a company who executes government contracts, an organization that receives government grants etc. his/her salary is paid by people working in the private sector. Even though government employees pay “taxes”, these “taxes” just reduce the cost of that worker, since the taxes go back into the pool of money used to pay government salaries. As a result, it is impossible for the government to operate without loans or tax contributions from private sector workers.

Tax marketing is often different from tax implementation.
Taxpayers are often more willing to approve taxes for education, so government agencies will sometimes market a tax as a way to improve schools without restricting the money to schooling.

Once your kids have an understanding of taxation they can make sound economic decisions for themselves and help their communities make wise choices about taxes and community services.

Financial intelligence as important as IQ

News Herald – Juliann Talkington

Juliann

The latest Center for Microeconomic Data Quarterly Report on Household Debt and Credit revealed that total American household debt reached $13.15 trillion in the fourth quarter of 2017.

In addition, a recent bankrate.com survey suggests six in 10 Americans (61%) don’t have enough savings to cover a $1,000 emergency and four in 10 (39%) have nothing in their savings accounts.

At first glance, it is difficult to understand how so many Americans can be in such poor financial shape. After all, making wise money decisions does not require proficiency in particle physics or an understanding of Shakespeare.

The biggest challenges appear to be intense peer and marketing pressures. If friends and marketers can create this type of havoc in our personal lives, it is imperative that we make sure our children are aware of the pressures and have the tools to make wise financial choices.

Some of the key concepts and teaching ideas are:

Money is limited. Give your child a fixed amount of money. If he/she spends it all on candy near the store entrance, he/she will not have money to purchase a doll or toy truck a few rows back.

Money is earned. Rather than giving a child an allowance, issue money based on successful execution of tasks – emptying the dishwasher, mowing the lawn, folding the laundry, etc.

Spending beyond your means comes at a cost. Credit card companies are VERY good at marketing. It is critical for kids to understand that marketers play on their desire for immediate gratification. Whenever you spend money you do not have you are charged extra money. For example, if you put $100 on a credit card for a year, you will have to repay about $115.

Saving makes sense. Kids need to understand compounding. The sooner you start saving the more the money will grow. If you save $1000 this year and make 5% you will have $1050 at the end of the year. If you make 5% the following year, you will have $1102.50.

Cheapest is not always the lowest cost. Remind your child that there are more than immediate costs. If the $15 shirt falls apart in the wash after the first month, it would be less expensive to buy a $25 shirt that lasts a year.

Even though teaching children financial responsibility may seem overwhelming, it is imperative that children are aware of the marketing and peer pressures they will face and are empowered to make wise decisions with their money.

As More Parents Expect Students to Pay for College Costs, Need for Financial Literacy Grows

Education World – Nicole Gorman

“A fifth annual survey from Discover Student Loans reveals that parents are increasingly expecting their children to take financial ownership of higher education costs…Danny Ray, president of Discover Student Loans notes…“With an increase in responsibility comes the need to be prepared, and we encourage families to have discussions early and often on how to pay for college,” he said. This also brings into discussion the need for financial literacy education in America’s classrooms. Because most states do not require that financial literacy be taught in schools, most students never have the option to learn money management skills and financial responsibility before taking out their first student loans…Young adults are aware that they could benefit from financial literacy courses. Last week, a survey from the National Financial Educators Conference found that above any other subject, students think that a money management course would be the most beneficial to their lives.”(more)

Report: Financial Struggles in Community College Go Beyond Tuition

Education News – Raymond Scott

“Those who enroll in community colleges often do so in the hope of receiving an affordable education. There is a growing body of research, however, that suggests low tuition is too often misunderstood as low total cost. In other words, it requires much more for students to stay in college rather than just a low-tuition. Indeed, tuition composes only 20% of community college students’ total costs nationally…Beyond tuition, basic needs such as such as housing and food are part of the cost of a college education, and students need to cover the costs of transportation, textbooks, and supplies to attend class and study. Moreover, these financial obligations do not include unanticipated costs…The report illustrates that even at the lowest tuition colleges, students cannot afford the costs required to obtain a college education.”(more)

5 Ways Parents Hurt Their Kids’ Chances For A Scholarship

The Huffington Post – Ann Brenoff

“With college applications submitted and decisions trickling in, most parents are now focused on the scholarship phase — how to actually pay for things. A H/T to Tyler Hakes, marketing director of CollegeRaptor, for these tips on what some parents may be doing wrong.”(more)

Why the price tag of a college degree continues to rise

The Washington Post – Jeffrey J. Selingo

“Why does college cost so much? It’s a question parents, students, and politicians often ask and the answer is often elusive. There is much speculation about what is exactly to blame for college costs that tick up more and more every year above the rate of inflation and well above lagging family incomes. You’ve probably heard about a lot of reasons for the price surge: tenured professors, climbing walls, luxury dorms, too many administrators, overpaid presidents. But it’s almost impossible to isolate one or two causes…every year, researchers at the Delta Cost Project, which is run by the American Institutes for Research, attempt to make sense of higher education spending by explaining in detailed reports where the money to pay for college comes from and where it’s spent. Its latest report was released this month. Here are two key reasons its researchers said colleges costs continue to rise even in an era of low inflation:”(more)