How can parents talk to their kids about the economy?
About this video
Sal encourages parents to explain to children how the wider world is paid for: highways, the military and social services are funded by taxes. He gives examples of sales tax (a $4 item costing $4.32) and income tax (a $50,000 salary is less after taxes), and suggests explaining local, state and federal government. Talking about taxes helps kids see that nothing shows up for free and opens up conversations about society.
You'll be able to
- explain what taxes are used for.
- work out how much sales tax was added to a price.
- explain why take-home pay is less than a salary.
Key words
- Taxes
- Money people and businesses pay to the government to fund public services.
- Sales tax
- Extra money added to the price of something when you buy it, which goes to the government.
- Income tax
- Tax taken from the money people earn.
- Social services
- Help provided by the government, such as support for people in need.
Transcript
- So just as it's really important when your children are young to talk about the grocery bill, or the utility bills, or whatever else it might be, it's also important to point out, well how does the whole world work? Who pays for these highways? Who pays for the military?
You know, whatever social services. And at least get 'em thinking about, well, okay, this stuff doesn't just magically show up. Someone has to pay for 'em. And that is the role of taxes. And how does the government get those taxes? Well, there's sales tax, so you know, you thought something cost $4, but when you go to pay, it's actually $4.32.
Why is that? Well, that 32 cents is gonna go to the government. What's that government gonna spend that money on? Or income tax. And income tax is a very important thing to talk about with children because they might say, oh well, if I make $50,000 a year, and even the ones that are thoughtful about money, say, well I could buy this, I could buy that, I could buy this.
But you have to point out, well, you know, after taxes, it's only going to be this amount of money. And then they're gonna be like, oh, (chuckles) okay, I see. And those taxes, they go to the government. Explain state government, local government, federal government.
Where those taxes go. And then there's actually room, not just to talk about, kind of taxes, but it actually makes you talk about society, and eventually political decision. So I think, you know, taxes is part of the story of allowing kids to realize that things just don't show up magically for free.
That money is a very important part of our system and it's frankly just not talked enough about.
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