Justice due knows no boundries.Tel: 202-331-7900

10 Tax Tips for Volunteers

Even though it seems like money and financial topics are discussed everywhere, these are not concepts your children will learn automatically. Teaching your children basic money concepts, including the value of saving and investing, can benefit them for a lifetime. Some strategies to help teach these concepts include:

  • Impart money concepts along with the children’s allowance. You must decide whether to tie your children’s allowance to the performance of chores. Some people feel that doing so instills the concept of working for pay, while others feel chores should be performed without pay as part of a child’s family responsibilities. When setting the allowance, make sure the child understands what expenses must be paid with it. The allowance should increase as your children grow older and should be large enough that the children have money left over to make their own purchasing decisions.
  • Provide opportunities to earn extra money. Offer to pay your children for additional chores around the house, so they learn the connection between effort and pay. Once your children start working at a paying job, go over their pay stubs with them, making sure they understand what taxes are deducted for and how much of their pay it represents. Start teaching your children ways to reduce their taxes, such as funding an individual retirement account when they become eligible.
  • Allow your child to make financial decisions. You may not agree with the choices your children make, but they should learn from their mistakes. That doesn’t mean you can’t discuss options with them, but the final decision should be theirs.
  • Encourage your child to save money. Saving for tomorrow rather than spending today is a difficult concept for adults as well as children. Thus, you may need to offer incentives to encourage saving. You may require a certain percentage of your child’s allowance be set aside for long-term goals. Or you can match your child’s savings, perhaps contributing 50¢ or a dollar for every dollar your child saves.
  • Explain the basics of investing. At an early age, open a bank account for your child, explaining concepts like saving and compound interest. Around age eight or so, explain how businesses operate and how investors buy and sell stocks. As their interest grows, help them purchase stocks with some of their savings. Since minors cannot own stocks, you will need to purchase the stock as custodian for your children. Teach your children how to research a stock, follow its price, review its annual report, and decide when to sell.
  • Encourage your children to take finance courses. Many high schools and colleges offer courses that teach stock basics and personal finance. Encourage your children to take at least one of these courses.
  • Be conscious of the money messages you send to your children. Your children watch your actions closely, so how you treat money will be a significant influence on their views. If you make large purchases only after careful research and price comparisons, your children will learn to be careful before making a purchase. If you use your credit card cautiously and explain how to select a card, what items to charge, and how to pay off the balance every month, your children will learn not to abuse credit cards.