April 15 is traditionally tax day. In St. Louis and nationwide, this year, an extension has been granted until Monday, April 18 because of Emancipation Day, which falls on a Saturday, being moved to April 15 for celebration. The day is inevitable every year and can be overwhelming to some adults. So, when is it a good time to begin teaching your children about money and taxes?
In the St. Louis area, Junior Achievement in Chesterfield is a wonderful resource for teaching junior high and high school students about money management and running a business. Local banks and credit unions also provide coloring books and informative fliers about money for younger children. There are also some wonderful online resources as follows:
Larry Burkett's Money Matters For Kids
It's really never too early to start teaching children about money management. Obviously, you won't sit down with a toddler and present them the how-to instructions of a 1040 Form. But, as soon as your child receives an allowance, they are old enough to begin managing this money. Talking to your children about basic financial information such as the difference between Needs and wants is a great place to start for even a preschooler to understand. Explaining to an elementary-level child what taxes are and why we pay them is helpful. Though, it might be complicated to explain why a homeschooling family in St. Louis pays taxes to support the public school system they don't even use. Still, there are other purposes for taxes such as roads and other community projects.
Allowance can be a great way to teach children about more adult concepts of withholding and giving or tithing 10%. To make the concept of withholding and taxes and even giving or tithing understandable to your child, it will be good to start with coins as opposed to a solid dollar bill. Dimes work well as they break down nicely into percentages. Give your child 10 dimes and explain that this is their money that they have earned, but because they are part of a team, or community, some of it will first be set aside. If you want to teach the concept of tithing 10%, hand them 10 dimes and have them put one of the dimes into a piggy bank marked “Giving,” or “God's.” Have another piggy Bank that represents Taxes using whatever creative name you want to give this Piggy Bank. At this point, you can either count out the rest of the dimes into your child's open hand and tell them this is his or hers to keep. Or, you can carry the lesson on by adding more Piggy Banks representing bill to be paid, etc. You might even want to put a picture of a toy your child is saving toward on the “Saving” bank and a picture of perhaps a missionary or child you sponsor through World Vision or Compassion on the “Giving” bank. Keep it simple and encouraging meeting your child at their individual learning level.
If you haven't done so already, open a savings account for your child. When it is time for your child to get a job and pay taxes, make sure you sit down with them to explain step-by-step instructions of how to fill out both the 1040EZ form and the itemized forms. Both can be picked up at any local library. This way, they get a better understanding of the process. Sometime around the 7th or 8th grade is a good time to have them practice how to write checks and balance a checkbook even if they don't yet have their own checking account. Lots of practice is good. Any teaching about money you can offer your child is a good foundation for when they are needing to earn and pay bills on their own.
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