A couple of weeks ago, before the election, my granddaughter walked into my living room as I was watching one of those political shows on TV. I've been in the financial industry for several decades now, and even I was scratching my head as the commentators spoke about the candidates' tax policies. The rhetoric was so needlessly convoluted. After staring at the screen for a moment, my granddaughter turned to me and asked what taxes are.
I told her that we all pay the government money so that they can provide services for us. I could tell that she was confused. I remember a similar explanation not getting through to me when I was a child and knew I should employ a different tactic now that I am the one doing the teaching.
One of the main ideas I promote is the importance of making your world your classroom. I told my granddaughter that sometime soon, we will go for an adventure (adventure sounds much cooler than an 'informative walk') and figure out firsthand what taxes are and what taxes do.
Now as your children grow up, lessons should become more advanced and you should educate your children on the intricacies of taxes to the extent that you understand them. My granddaughter is quite young -- she's only 4 -- but she asked about the topic and that's a clear sign that she's ready for that discussion. For her, our walk would certainly suffice as an introduction to tax policy.
I planned it out in my head. As we walk, I'll point to different things we pass and ask my granddaughter to tell me how they came to be. For example, I'll point at the trees and she would likely say someone planted a seed and it grew. When I point to the road, I expect she'll say something along the lines of 'the men with the giant roller put it there.' I'll then ask her how she thought those men had the money to build the road, and begin my lesson.
I recommend taking walks, or adventures, like these with your young ones. Engage them with the world around and make these conversations interesting for both you and your kids.
Explain how things like roads, schools, bridges and so many other things we use every day are paid for by all of us. All of us in this community use these roads, so we all need to see they're taken care of somehow. Tell them that we have to give money to the government to make sure that we can have these roads to drive on. Let them know that when they get older, they'll be able to vote to choose how that money gets spent. Most kids love the idea that someday, they'll be able to make big choices.
It's important to let your children and grandchildren know that you were just like them when you were younger. Share with them how you did or didn't learn about taxes and other financial issues.
When I was a kid myself, I had saved to buy a very special bracelet for my mother. Every time I was in the store, I pressed my hands to the glass and stared at the bracelet, knowing she would love it. I also stared at the price tag and knew I had some saving to do. I saved and saved and when I had saved the dollar amount on the tag, I proudly took my money to the store to buy that bracelet. I smiled and presented the cash at the register, but I didn't have enough because I didn't know about sales tax. I was crushed... and confused. The cashier told me how much extra I needed and when I had saved up to that new amount, I returned and was able to make the purchase. I think this story fitting, as kids encounter sales tax pretty early in life.
Taxes are a part of life. They're not fun and they're not going anywhere, but explain that at their core, the idea of taxes is a great one.
Don't let the conversation end with bridges and bracelets. As your children grow, evolve the conversations. Teach your children about income tax, property tax, inheritance tax, social security contributions and all the other taxes we enjoy. The fact is that right now, so much of the information our young people learn about taxes and personal finance in general comes from the home. Think about how confusing taxes were to you when you first learned about them and know that you can start teaching your children young so that they don't suffer the same fate.
What was your first introduction to taxes?