Taxes are a part of life. Most people don't learn about taxes until they collect their first paycheck. If you learned about taxes when you collected your first paycheck, you were probably shocked to find out how much money was taken from you.
Now that you have children, it's a good idea to teach them about money and taxes while they're young. Learning about income and taxes at an early age will help your children make wise decisions when they're older. Here are a few simple ways you can teach your kids about money and taxes.
Teach Your Kids How to Bank
Find teaching moments when you use your ATM card or make a banking transaction. This will help your children understand how your money works for you. While you're in the bank, have your children sit down with a bank representative and encourage them to ask questions. This will allow them to become familiar with the way banks work. If your children are old enough to have an allowance, have them open a savings account during their trip to the bank.
Tax Their Allowance
You want your kids to understand the concept of taxation. Each time you pay your child their allowance, explain how much of their income went to taxes. Place the money you've deducted from their allowance into their savings account. When tax time rolls around, you'll be able to show your children the money that they've paid to their taxes.
Instill Personal Responsibility
Let your children choose how to spend their own money, even if they make mistakes. When they do make a mistake, avoid the urge to bail them out. Instead, use it as a teaching moment to help them understand the consequences of the way they spent their money. Consider providing them with a loan that they'll be required to pay back. This will help teach them to manage their money responsibly.
Schedule an Appointment with a Tax Professional
Filing taxes can be frightening, especially the first time you file. Help your child understand the process by having them sit down with a tax professional, such as RJ. Garner CPA & Associates, PLC. Your tax advisor will be able to explain the process. When it's time for your child to file their first tax return, they'll know what to do.
Money management and taxes are important aspects of adulthood. These ideas will help you prepare your child for the future by teaching them how to handle income and taxes while they're young.