Are taxes emptying your pockets?
Tax day is coming up quick, and the rush to get ready is beginning. Everyone knows taxes can be very confusing to the average person – that’s why accountants get paid so much. But there are some common misconceptions about taxes that could make a difference to you and your finances. One of the biggest ones is tax brackets.
If you asked a random person out on the street what tax brackets are, they would probably say that the higher your income, the higher the percentage you have to pay in taxes. That is partially true. But because of this not-quite-accurate definition, many people misunderstand and say something like “I don’t want to have a higher income, because then I would be in a higher tax bracket.” In fact, that is an awful strategy.
The way the brackets work is a little more complicated, but overall it costs less money than the previous definition would lead you to believe.
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One of the hardest things to do as a parent may be teaching your child overtime to become more financially independent. Even though it can be difficult and could potentially cause some tension at times in your relationship with your child, it is a vital lesson that needs to be taught.
I recall talking to a friend not long ago who was married a few months ago. While we were catching up, it was obvious by the tone of my friend’s voice that he was stressed out about something. I kept asking if something was wrong, and finally the truth came out. He said that while everything was great with his marriage, financially it was tough to support themselves without the help of their parents. This is an example of why it is important that kids learn this lesson as soon as possible.
Though many people agree with this statement most of those will agree it is easier said than done. For those of you looking for help, here are three tips to help start you on the right path.
1. Give an allowance: Give you child a chance to earn the money they need to do fun things with their friends by providing them money in return of them completing certain chores or tasks.
2. Encourage a part-time job when they are old enough:This doesn’t necessarily mean a job that requires an employer. This could include something such as mowing lawns or babysitting.
3. Help your child understand the importance of saving money: If they can constantly save some money they will begin to lay a foundation that will help them the rest of their lives.
From a nation whose savings rate was negative only a couple of years ago, the U.S. last year was up to a 4.6% last year and could reach as high as a 6.5% this year.
That’s quite the turn-around. And thank goodness. If money is power, saving money is empowering.
Savings Starts Somewhere
Since keeping financial secrets from your spouse can be a recipe for disaster or the other D-word, it’s best to start on these basics together. Who knows? You could fall farther in love over your finances. He might even find your healthy savings account tantalizing, and she may think your financial confidence is devilishly attractive.
So, what can you do to be part of the savers? This is the first part of a 5-part installment on becoming a Savings Superstar. For a little sneak peak at the general advice, keep reading:
-Know your plastic personality.
-Don’t trust yourself to pay yourself first.
-Deposit your paycheck and other money to your savings account.
-Limit yourself to one ATM withdrawal per week.
-When you make a credit-card purchase, record it immediately.
-When you subtract a check from your account, round up the amount.
-Toss your spare change into a fun savings bank.
-Bag the savings from brown-bag lunches.
-Pay yourself after you’ve paid off a debt.
-Give yourself a cooling-off period.
Do you feel empowered yet?