Help Your Kids Understand Taxes

At some point, your kids have probably watched you:

  • Mumble under your breath (or louder!) as you work on your April taxes
  • Gripe about how much tax disappears from your paycheck
  • Make a not-so-nice comment about sales tax added to your purchases

Sound familiar?

Taxes can be an irritation, for sure. However, it’s also important to remember—and to help our kids understand—that a lot of our tax money goes to helpful services from which we all benefit. Here are some ways to help your kids understand just what taxes are all about:

Play the “Who Pays For It?” Game

Keep the tax concept super-simple for young kids. Whenever you see a fire truck whiz by, or pass a favorite park or community swimming pool, ask your kids: “Who do you think pays for firefighters to help us?” or “Who pays for our swimming pool to stay clean and have lifeguards?”

The answer is “Us! Everyone who lives in our town helps pay for those great services and places. A little bit of the money we make from our job is automatically paid to our city/county/state. That money is called ‘taxes.’” (Now, don’t you feel a little bit better about paying taxes when you think of the money that way, too?)

Create a Family Tax

Financial expert Neale Godfrey, president and CEO of GreenStreet Commons, suggests a Family Tax as a hands-on way to help middle-school and older kids start understanding taxes. When you give your kids their allowances or pay them for extra chores, require that a small portion of the money (maybe 5%) be set aside in the Family Tax jar. You (the grownups) may want to add some funds to it, too.

Every few months, make a point of spending Family Tax money on something that benefits everyone in your tribe. One suggestion: A family pass to the pool, zoo or local science museum. The idea is to help your kids see that taxes do useful things.

Review Your Teen’s Paycheck

Once your kid starts working, taxes will quickly become a reality. They’ll undoubtedly wonder why they’re losing so much of their paychecks to taxes. At this point, Godfrey suggests explaining a bit more about tax brackets, Social Security withholding (FICA) and more. A few sites that might help: IRS Understanding Taxes and IRS Tax Form Simulations.

By the way, unless your teen is making a ton of money (check IRS Publication 929), you might want to help them fill out a W-4 form. That way, they can claim that they’re exempt from federal and local taxes (line 7). The result: your teen will be able keep more money from their paycheck and not have to wait for a tax refund in the spring.

However, your kids should fill out tax returns even if they don’t owe the government any money. Read more about At What Income Does a Minor Have to Fill Out an Income Tax Return?

 

(photo courtesy © Chris Potter cc2.0)

How to financially prepare your kids for back-to-school season

Parents aren’t the only ones pulling out their wallets for back-to-school season. According to a 2019 survey from the National Retail Federation, teens are spending an average of $36.71 of their own money and pre-teens an average of $26.40. 

This year, your back-to-school budgeting may be a little different (okay, a LOT), but one thing remains the same: A new school year means new costs. Which also means new opportunities for your kids to learn about money. Follow along for our tips on getting your kids ready for the upcoming school year!

Plan beyond the school supply list

School supply list with pencil and ruler

Back-to-school budgeting brings up a lot of conversation about school supplies for the first day, but what about the whole school year? When you sit down and talk to your kids about their school supply lists, you may want to chat about other expenses that might pop up throughout the year. Here are a few to consider:

  • Sports
  • Yearbooks
  • ACT/SAT study materials
  • Lunch money 
  • School pictures

Shifting over to a virtual learning environment? Some of the usual expenses may go away this year, but you should be ready for new ones. Think: Virtual classroom decorations, new desks and high-powered laptops.

Talk about back-to-school deals

Love a good BOGO deal? So do we. But your kids may not understand how much it matters to score a good deal — especially during a busy retail season like back-to-school season. 

As you probably know, smart shopping means looking for deals, shopping early and doing research before buying. To get your kids into these habits, try comparing prices online and showing them how to find discounts. Bonus: Help your kids make savings goals throughout the school year. They can do this with their Greenlight app

Separate wants from needs

Trade-off decision about spending extra on pizza delivery

Coming up with a back-to-school budget is a great time to talk about wants and needs. If your kids have a school supply list from their teacher, use it as a guide. If not, it doesn’t take too long to come up with one yourself — or use a quick start list of common items by grade

Go through your kids’ school supply lists one by one. Talk about each item and whether it’s a must-have or a nice-to-have. Then, decide how they (or you) would like to budget accordingly. Maybe your kids want to splurge on a set of trendy binders but they’re okay with buying cheaper folders and erasers. Or maybe they’d rather save for something else down the line, like a laptop or an iPad. And look at that… they’re already thinking about wants and needs! Piece of cake.

Always come back to learning

Your kids might be excited about the first day. They might be nervous. You might be stressing about setting up a virtual learning environment. Or maybe you’re just not ready to think about any of it yet!
 
Here’s what really matters: Your kids are learning. And we’re not just talking about school. Kids learn by doing chores, deciding how to spend their money and setting savings goals. Just pull up your Greenlight app and let the learning (and fun) begin.

A fresh new look for Greenlight

In 2017, Greenlight started on a bold mission to raise a generation of financially-smart kids. Now, that mission is growing. Because… well, we’re growing.

1 million strong

Earlier this year, we surpassed 1 MILLION kids and parents. That’s more than 1 million of you who…

  • Dreamed up new features for us to build.
  • Reached savings goals (and then created more). 
  • Finished chores on time and earned allowances.
  • Chuckled at our corny jokes. 
  • Gave money to charities.

And throughout it all, it’s the 1 million of you who inspired us to keep reaching for new milestones.

Fun, fresh and new

We thought a lot about how we could celebrate you, be better for you and evolve the Greenlight you know and love.

As a team, we decided it needed to be big. It needed to be new. 

So we came together to imagine a new brand — a brand that can be there for every first, every birthday, every transition and every milestone. A brand that inspires your trust and is there to celebrate every little joy of being a parent.

Today, we’re so happy to introduce you to the new look for Greenlight, as we take on an even bigger mission: to shine a light on the world of money for kids and parents.

What changes?

Starting today, the new look and feel will take over our website, social media, emails and more with (minty) fresh colors, a new logo, fun patterns and delightful photos that reflect our vibrant community of families.

What’s next? Stay tuned. Over time, you’ll see our new look across more and more of the Greenlight universe.

What stays the same?

Us! We’re still Greenlight. We’re just growing up, like your kids do. For now, your app and debit cards will still look largely the same. But, changes are on the way — we’re just getting started!

From our Greenlight team to your family, thank you for getting us here. With 1 million reasons to celebrate — and many more to come — welcome to the new Greenlight.