4 Valuable Life Lessons Your Child Can Get From Understanding Taxes

Life’s realities are tough, but knowing what these realities are makes you tougher. It’s like knowing who your enemies are and what they can do so you could be prepared for battle. Among the most difficult realities to understand are: “Why money is never enough?” and “Why does the government still want to take away what little you have?” Welcome to the world of taxes.

Understanding taxes is hard especially if you have to pay them. It’s like, why? A recent survey revealed that average American adults got an “F” on personal finance questions including taxes. Respondents scored an average of 51% in a 10-question quiz about taxes. So if explaining taxes to the average adult is already a challenge on its own, how can adults teach their kids about taxes? For a start, adults and taxpayers need to realize that helping kids understand taxes at a young age teaches kids valuable lessons that allow them to grow, be critical, value hard work, and have a sense of responsibility. Teaching kids about taxes is teaching them about life in general. There are rules, there are responsibilities, and there are consequences if you fail to act on them. Below are four lessons about taxes that you can teach your child today and hopefully help them be a better person and a citizen in the future.

Sharing is caring

Photo courtesy of Unsplash via pixabay.com

Be careful what you teach your kids about taxes. Sure, when times get rough and you can barely make it through another month of bills and expenses, you take a look at your paycheck and weep over the certain percentage that the state took away from your salary. You are entitled to feel bad for a while, but you must be able to get over it.

Paying your taxes is a way of showing you care about nation building and is doing your share to make sure everyone’s needs are met. On the road, when you pass by men building road projects, tell your kid that it is where taxes go. It would be easier for kids to learn about taxes if they would see an actual example of what taxes are for. In an article for Forbes, financial guru Neale Godfrey advised parents to treat lessons about taxes as lessons about citizenship. In simple terms, taxes help a country pay its bills that even rich people cannot afford. Everyone must give their share to the government so that there would be enough funds to pay for schools, hospitals, police, firefighters, and other services. Paying taxes is all about sharing and caring.

It’s about obeying rules

Photo courtesy of Gaertringen via pix abay.com

Does your kid hate rules? Teaching kids about taxes at an early age may help change that. Taxes can be high or low but that’s not the point of the exercise . It must be paid up to the last cent and at specific times. Yes, the government has rules and as a citizen protected by the state, you must obey its laws. One way of helping kids understand taxes and how they work is to start a “jar system.” According to Godfrey, this is a good way to teach kids to save money and have a sense of obligation at the same time. You may have a jar for “quick cash,” “long-term savings,” and a “tax jar.” For every $10 of allowance, allocate 15% or $1.50 for the tax jar. Your children must put it in everytime you give him his allowance. Of course, you really don’t give it to the government, but you can save it in your child’s own bank account.

Sense of responsibility

Photo courtesy of ruthclark via pixabay.com

Taxes are all about shared responsibility. To be a responsible citizen, you must pay your taxes in full and on time. As a citizen, you are responsible in making sure public school teachers receive their salaries so that they can continue teaching children. It’s easier to introduce kids to the world of taxes if they feel like they are accountable. It’s easier to teach kids about taxes if parents can make them feel that this obligation makes them a part of something bigger than themselves. Kids have this innate longing to be a leader and be responsible for something, like being a team captain in little league baseball. Explain to your children that if they want the team to win, everyone must contribute. If they want the country to move forward, then they must be responsible enough to make sure that happens.

Principle of fairness

Kids have a special way of getting what they want. They pull that cute pout or throw tantrums. They are stubborn like that. But the principle of taxes is not like that. It’s about giving and taking. It’s about fairness. Cite your condo or house as an example. In order to have a safe renting environment, homeowners have to pay real property taxes annually. It’s what you pay for in exchange for the services you get while living in a certain community. Patrol officers who roam in the community in the middle of the night, traffic enforcers who make sure the flow of vehicles is light, and garbage collectors who take care of sanitation are all being paid by the local government to make their services available. In short, the government makes sure your community is safe and comfortable so you have to help them pay for the services in return. Fair enough?

Taxes are not a bad thing. Stop telling your kids otherwise. If kids and taxes go well together, precious life values will follow. When you are out there on the road, find something paid for by taxes like buildings, bridges, schools, construction workers, street sweepers, etc. This will make explaining taxes easier and will give kids the positive attitude about paying taxes in the future when they acquire properties, get a job, and buy properties on their own. It will teach kids about citizenship — what it truly means and what it entails. It will teach kids about laws, about being responsible, and about sharing. It also teaches them to be grateful. Life is taxing, after all, so teach your kids about financial lessons today.