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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.

Parents Encouraged to Teach Their Kids About Money, Finance

Education News – Kristin Decarr

“Educators and parents, politicians and lobbyists are discussing the issue of who is responsible for teaching children about financial literacy, and at what age this education should begin. Despite 43 states in the US requiring courses on personal finance and all 50 requiring economics courses to be included in K-12 standards, fewer require those standards to be implemented by districts (35 and 45 respectively), and even fewer require courses to be offered in high school (19 and 24 respectively)…Many experts state that reliance on public education may not be enough. Instead, it is suggested that parents begin the discussion at home. While not everyone will follow the same strategy, Jayne A. Pearl, the Amherst, MA-based author of Kids and Money: Giving Them the Savvy to Succeed Financially says parents should turn daily activities into learning experiences for children.”(more)

5 Financial Concepts To Teach Your Teen Before High School Graduation

Forbes – Mark Avallone

“With graduation around the corner, high school seniors and their parents are focused on their school’s graduation requirements. But what about their personal finance education requirements? Are financial skills included in a student’s formal education? Not usually. In fact, I am astonished by how little young people know about personal finance, but I am also impressed by how much interest these students express once they are presented with some financial insight. So, what financial concepts should graduating seniors know before they walk down the aisle to Pomp and Circumstance?…strong personal finance skills are a critical component to an individual’s success. So it’s important that we check in with our teens, evaluate their financial knowledge, and pick up the slack where needed. To help you prepare your teens for the real world, I’ve included below my top five financial topics that teens should understand by high school graduation.”(more)