Brought to you by: Breez DeGuzman

When you were young, did your parents ever tell you that money doesn’t grow on trees? Have you found yourself repeating that mantra to your own children? It’s hard for kids to understand what it takes to make money, because they rarely have to earn their own. And when they’re teenagers, the allure of the latest fashions, newest electronics and other things that all the other kids seem to have makes them even more eager to spend, spend, spend.

The teen years are prime time for learning about the ins and outs of the almighty dollar. This is a time when kids become more interested in material things. It’s also a time when they can begin to work and earn some of their own money. But perhaps most importantly, it’s a time when they will soon be on their own and making financial decisions themselves.

It’s critically important for teenagers to learn about money and how to manage it before they leave home. Here are some things we should strive to teach them.

* Teens need to learn the difference between needs and wants. This can be a fine line for adults, and it’s even more confusing for teenagers. They need clothes, but they don’t really need those expensive designer jeans. Helping them learn to distinguish wants from needs is an important life lesson.

* Budgeting is crucial. Even teenagers should have a plan for how they will spend their money and stick with that plan. That doesn’t mean they can’t have any fun with it, just that they need to prioritize their spending so that the important stuff is taken care of first.

* A penny saved is a penny earned. This old adage is one that can make our lives much easier, and it’s best learned early. Teens should be taught about the benefits of saving, such as earning interest, having money in case of an emergency and being prepared for retirement.

* Don’t borrow too much money. Using credit responsibly helps us build up a good credit rating so that we can easily buy things like homes and cars. Using it irresponsibly leaves us saddled with debt and a poor credit rating. It’s important to learn this early in life rather than late.

* Taxes are a fact of life. Teens often feel that having taxes taken out of their earnings is unfair (as do some adults). It’s important for them to know why those taxes are taken out and what they pay for. It’s also a good idea for them to learn how to prepare their taxes correctly, either by hand or with software.

Learning about money the hard way can be quite painful. Taking the time to teach your teenager some important lessons could prevent him from making some big mistakes as an adult. He might not particularly enjoy it right now, but one day down the road, he will thank you for it.

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The teenage years are a time of transition. Teens are no longer kids, but they’re not quite adults, either. They still have the carefree attitude of childhood, yet they are also becoming mature enough to do many things for themselves.

One of the biggest decisions for teens and parents to make together is whether the teenager should get a job. The money earned can help pay some of the teen’s expenses, such as transportation, clothing, lunch money and cell phone bills. It could even be used to help pay the family bills. But there are some things to consider before filling out those applications.

Pros

Earning their own money helps teenagers develop responsibility. They learn first-hand that it takes hard work to get the money needed to buy the things they need and want. This is a very important lesson for anyone.

A job will help your teenager develop good work habits and skills that will help them in future employment. The types of jobs that are available to high schoolers might not be what your child wants to do as an adult, but good work habits translate into any career. And there are certain skills (such as handling money) that are beneficial in many jobs as well as everyday life.

Having a job can help develop self-confidence. Bringing in an income makes teens feel good about themselves. That self-confidence helps them be more secure in making good decisions, and it can help them reach goals such as getting into their college of choice.

Cons

Working too much can be detrimental to a teenager’s performance in school. Students may not have as much time to spend on their homework, causing them to rush through it and do only what they must to get by. They could also become less interested in school when they realize that they can make money without a high school diploma or college degree.

Work could cut into time for extracurricular activities. Sports are good for teens’ health, and clubs can keep them active in their communities. But when they get jobs, they may ditch these activities in favor of working.

If they don’t budget their money, teens could develop poor spending habits. The money they earn from working will probably be substantially more than they received for allowance. They could easily get carried away with it, spending it on designer clothes, music and other non-necessities instead of taking care of their needs and saving a portion of their earnings.

Allowing your teenager to get a job is a big decision, and one that should be made on a case by case basis. If you feel that your child is mature enough to take responsibility for earning and budgeting his own money and still keep his grades up, it might be worth considering. Teens with jobs can be a big help to the family budget, whether they contribute to household bills or just buy their own necessities.

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Reading is an important skill for everyone, and it’s one that benefits from being practised extensively in childhood. Kids who read often grow up to be better readers. This helps them do better in every aspect of life.

Some kids have a natural love of reading. Others need a little encouragement. The best thing we can do as parents is provide them with books that are challenging and educational, yet entertaining. This can get expensive if you buy lots of new books, but there are ways to keep your child reading for cheap or free. Here are some ideas:

1. Go to the library. This is the best place for anyone to read for free, and most public libraries have a large selection of children’s books. Best of all, the librarian can help you find books that are appropriate for your child’s age and skill level, so there’s no guesswork.

2. Look for used books online. There are entire sites that specialize in used books in various genres. Amazon.com is also a good place to look. They sell both new and used books, and they make it easy to compare prices among their sellers. You could also try eBay if you’re interested in buying used books in lots.

3. Check garage sales. When having a sale, parents often go through their children’s toys and books and get rid of the ones they’ve outgrown. The books you’ll find often sell for a dollar or less each, so you can pick up several of them for what you would pay for one new book.

4. Make a trip to your local book exchange. These places will take your used books and give you credit toward books that others have brought in. This is a great way to get rid of your kids’ old books and get more that are appropriate for their current reading level.

5. Visit your local thrift shop. These stores often sell donated items at rock bottom prices. Not every thrift store sells books, but it doesn’t hurt to ask. If they do, you could find some wonderful deals.

6. Find a closeout book store. These stores sell books that are no longer being published at discount prices. If you can’t find one in your local area, check online.

7. Check your newspaper’s classified ads or your local trading post publication. You probably won’t find many individual books for sale, but parents sometimes advertise kids’ entire book collections if they want to get rid of them without having a garage sale. You can often find large lots of books at very low prices this way.

8. Find a source of hand-me-down books. If you have a friend with a child a year or two older than yours, you could ask what she’s going to do with the books her child outgrows. She might offer to sell them to you. There’s also a chance that she will be willing to pass them along for free.

Fostering a love of reading while your child is young will benefit her for the rest of her life. And you don’t have to spend a fortune on new books to do it. Used books and books borrowed from the library have just as much value as those purchased from a bookstore, and they’re much easier on your wallet.

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If you have a teenager, you know that they’re not exactly the most frugal creatures on the planet. Most have not had to work for their money while growing up, so they may not appreciate money as much as adults who know how hard it can be to come by. And with the peer pressure they face today to have all of the latest and greatest clothes, gadgets and entertainment, it’s no wonder that money seems to burn a hole in their pockets.

It may be tempting to let them carry on with their carefree spending habits. But doing so would be a disservice, as these habits tend to stick with them into adulthood. It’s much better to help them set up a financial plan during the teen years so that they may learn responsibility before they are out on their own.

Saving and Investing

One of the most important things a teenager can learn about money is the importance of saving a portion of her earnings. This will allow them to build up an emergency fund. It can provide a way to buy big ticket items without having to go into debt. And it gives them money to invest.

Investing isn’t usually a top priority for teenagers, and it’s even a foreign concept for many adults. But getting started early is the best way to ensure a comfortable retirement. It can also provide some passive income in the years to come, reducing worries about unemployment or failing health.

Teens need to be encouraged to save and invest a certain percentage of everything they earn. Doing so before putting money toward anything else, even bills, will make it easier and more consistent.

Paying Bills and Buying Necessities

Once your teen has put some money into savings and investments, the next order of business is to pay monthly bills. Teens do not generally have as many of these as adults, but they may have a cell phone plan, car insurance or other recurring bills. These should be paid before any other spending takes place.

Next, teens can buy the things they need. Parents often cover some of their teens’ needs, but they may leave expenses such as school lunch, clothing and gas for them to pay. This provides good practice for the day when they start buying everything for themselves.

Discretionary Spending

Once the savings, bills and necessities are taken care of, it’s time for the fun part: discretionary spending. This tends to be the favorite part for most teenagers (and adults, too). But it’s important not to let your child get too carried away with it.

There’s nothing wrong with kids having some fun with their money while they’re young, but try to discourage them from spending every penny just because it’s there. Making a list of the things they want to buy can help. If there’s not enough money to buy them all and have some left over in one month, they can always be carried over to the next.

A realistic financial plan for a teenager contains all of these elements. This will give them some freedom with their money while also providing structure. And it will build the framework for responsible money management as an adult.

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A growing family is a source of joy for proud parents. But it’s also a source of growing expenses. Fortunately, these expenses are offset to a certain degree by tax deductions and credits.

If you are just starting a family, you’ll find that doing your taxes is a whole new ball game compared to when you were single, and even when filing as a married couple. Your tax return could be several pages longer, and will certainly be more complicated. But the good news is that almost every change that adding a child to your family makes to your taxes is in your favor.

Here are some of the tax breaks you might receive thanks to your children:

You can claim each child as a dependent. This is deduction which automatically knocks a few thousand dollars off of your taxable income, saving you a few hundred dollars in taxes in most cases. You can even claim full-time college students as dependents until the age of 24 as long as they do not take a personal exemption on their own taxes.

Many parents qualify for the child tax credit. This credit deducts $1,000 for each child from the amount of tax you owe. It is, however, phased out for those with a high income.

Parents who pay for child care so that they may work can take the dependent care credit. The amount you can take depends on the amount spent on child care, but it tops out at just over $1,000.

Some parents can take the earned income credit. This credit is available to taxpayers with income below a certain amount, determined by filing status. You can get this credit for up to two children, and it could add a few thousand dollars to your refund.

Adoptive parents can take a tax credit of as much as $11,390 to offset adoption costs. Those who adopt special needs children are eligible to receive the entire amount of the credit, even if they spent less than that on the adoption.

Taxes, Kids and Divorce

Divorce is another thing that makes your taxes more complicated. And when there are kids involved, it tends to get even more sticky. In most cases, it’s best to seek advice from a tax professional in such situations.

One of the most important concerns when it comes to taxes after divorce is whose claim will include the children. Tax rules indicate that the parent who has custody for the greater part of the year gets the child tax exemption. But if parents had joint custody, this may not be so easy to figure out.

Another thing to consider is child support. Child support payments are non-taxable, but only if they are specifically designated in the divorce decree as such. Otherwise, the recipient can be required by law to pay taxes on it.

Children have a major effect on our taxes. It is possible to do your own taxes when there are kids involved, but having them prepared by a professional is often the best course of action. By having someone who is well-versed in tax law prepare your return, you can take full advantage of all of the tax deductions and credits available to parents.