Teach Your Kids About Money by Involving Them in Tax Time
Teaching kids about money is one of the most valuable lessons a parent can offer. But as a parent, it can be hard to know how or when to do so.
Sean and Ken are both parents who work here at Umpqua – Sean's on the Product team and his kids are 16 and 13; Ken’s in Commercial Banking and his are 12, 14 and 17 – so they have first-hand knowledge of finances and talking to their kids about it. Both said that tax time offers a unique opportunity, especially for teenagers.
Here are Sean and Ken’s top three tips for teaching your kids smart money management, during tax season and year-round:
Bring them into the process: While “Let me show you how taxes work” probably isn’t your child’s idea of a hot Friday night, you can engage them by playing to their growing desire for independence. It also helps set them up for when they have their first job and have to file taxes for the first time.
Mention the idea in advance, then have them sit with you when you file your taxes, whether you do them at home or use an accountant.
Whether it’s taxes or everyday costs, Sean and his wife hope their discussions will help their kids prepare financially to leave the house for college and adulthood. “Money is always in the background of our kids’ lives,” Sean said. “But my parents never talked to me about it.”
Show your kids what taxes pay for: Maybe your kids have a general understanding of taxes from pop culture, where TV shows and movies poke fun at the chore of filing taxes. But tax time is a chance to explain how taxes pay for services we use every day, from parks to police officers, sidewalks to highways.
Ken points out that you can bring this thinking into any conversation: “The other day we were going into a parking garage and my son says that owning a garage would be easy money,” Ken said. “But I asked him to think about who pays the electric bill for the lighting, who pays for the paint for the parking strips or fixes the concrete.
“I want to teach them the value of money, so I take advantage of the opportunity,” Ken said. “I talk about the business side of things in a real situation.”
Give a glimpse into your family’s finances: Consider showing your child your W-2 or a pay stub, so they see how much goes to taxes throughout the year. This can be a good entry point into ideas around budgeting and other, larger topics.
If you haven't filed yet, remember that the sooner you finish your taxes, the better.