Hey there! It's Talk About Money Tuesday, my favorite day of the week!π€
It's also the day before Tax Day. I hope all my readers who are frantically filing their taxes today get them in before the deadline. β°
This Financial Literacy Month, take a minute to turn taxes into a teachable lesson that shows your child tax season isn't just about paperwork. It's also about understanding how money moves through daily life.
One way to help youth demystify adult financial responsibilities is to teach them basic tax concepts β like why we pay taxes, what a W-2 is, and how refunds work.
By helping young people understand taxes now, you're equipping them to make more informed financial decisions when they start earning their own income.
Money Stat
29%
When it comes to filing taxes, procrastination is the name of the game for some. In fact, 29% of Americans will put off filing their returns this year, according to an annual survey by IPX1031.
The top three reasons people gave for taking their time with their taxes: It's stressful, time-consuming, and they're afraid they're going to owe money.
For young people, learning the basics about taxes now can build confidence and reduce anxiety about filing later. And for parents, it's a chance to teach these skills so your kids grow up seeing taxes as manageable, not something to dread each year.
Get in the Zone
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Money skill: Understanding how gross pay turns into net pay
Why it matters: When young workers know how their paycheck is built they can make smarter money choices and avoid surprises when they see what they actually take home. It also makes it easier for them to confidently plan spending, saving, and long-term goals, instead of guessing based on what they earn per hour on paper.
Try this: Use a sample pay stub, your teen's pay stub, or your own (if you feel comfortable) to look at gross pay, deductions, and net pay side by side. Ask your teen what surprises them and discuss how each deduction reduces take-home pay.
Don't forget to talk through what the deductions fund. This helps connect paycheck deductions to real-world benefits instead of just seeing it as βmoney missing.β
Explain tax categories clearly and break down FICA (Social Security and Medicare), federal taxes, and state taxes. Link them to real services like Social Security benefits, roads, and schools so they won't just see it as "missing money."
You can also compare different earnings scenarios. Have your teen look at how take-home pay changes with different hourly wages or hours worked. Ask them how the differences would affect their ability to budget for goals like saving for a car or a new phone.
These activities help young earners see how paychecks really work and how money decisions play out in everyday life.
The Language of Money
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Tax-related vocabulary can be confusing for young people. But these youth-friendly definitions will give you language to jumpstart a conversation that helps them make sense of tax talk:
π° Gross pay: The money you made before taxes and other deductions.
π§Ύ Net pay: The money you take home after taxes and other deductions, also known as take-home pay.
π Withholding: Taxes taken out of your paycheck.
ποΈ Income tax: Money you pay the government based on how much you earn.
π W-2 form: A document that shows how much you earned and how much tax was taken out.
πΈ Tax refund: Money the government gives back if you paid too much in taxes.
Looking for more youth-friendly personal finance terms to share with kids and teens? ββDownload my Language of Money freebie. β
Money Talks
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Sales taxes are often young people's first real encounter with taxes of any kind. In fact, I can't even count how many kids I've seen get a sales tax lesson in real time at the store when they realize their money isn't quite enough for what they want.
Here's a couple ways to talk about sales tax to help youth understand why they make the final price of goods higher and why budgeting means planning for more than just the sticker price.
β‘οΈ Ask your child if they know the sales tax rate for where you live. If they don't, look it up together. Then help them calculate how much extra a $10 or $25 purchase would cost.
β‘οΈ Talk to young people about why we have sales taxes in the first place. Sales taxes should feel a little less abstract to them once they learn that they pay for things your family actually uses.
Loose Change
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π¨ Tax season brings about its share of scams. The IRS wants to make sure you know about this one.
π Having a pet can be expensive. Pet owners in New York could soon get a tax credit to help defray the cost.
π«’ Some young people don't think filing their income taxes is worth it. But these high school and college students did it anyway and got a big surprise.
Thanks for reading! If you want to read some of my past newsletters, click here. And if this newsletter was forwarded to you, please subscribe βhereβ.
'Til next time,
Audrey
βFounder &
Certified Financial Education Instructorβ
The FinLit Zone
600 1st Ave, Ste 330 PMB 92768, Seattle, WA 98104-2246
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