Teaching Kids about Tax and Superannuation

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Many perceive tax to be a bad or horrible thing. It is money that gets deducted from your earnings and it goes to the government to spend where it is needed.

In fact, taxes are not bad, they help people and the country. Find out more about why you pay tax and super from the ATO (Australian Taxation Office)

Taxes help Australians have a good school system, great recreation areas, a wonderful well-functioning health care system and much more.

If it wasn’t for taxes these things would not be able to be paid for. Roads and bridges would not be able to be built, public schools would not be as good as they are, and our public funded health care would not be able to keep going.

I would not want to live in a world where I could not afford medical treatment or have reliable transport and roads.

Taxes help provide for all and therefore it is an essential item that everyone needs to help pay towards.

Taxes help everyone. Infrastructure, public schools, roads, bridges, hospitals, health care and much more.

Taxes help everyone. Infrastructure, public schools, roads, bridges, hospitals, health care and much more.

Did you know:

“Your tax funds the PBS (Pharmaceutical Benefits Scheme) which provides a substantial reduction in the cost of over 208 million prescriptions per year.

For example, the cost of an ovarian cancer drug fell from over $2,000 to $38 per month when recently funded by the PBS.”

Do your kids understand what tax is? What about superannuation?

I asked my girls the following:

  • What do you think tax is?

They told me that it is a charge that you pay the government.

The kids were close, but I told them it is not really a charge. I explained that everyone pays tax. It is calculated on how much someone earns so that it is fair for all.  If all people pay a little bit each then the country has a lot so they can build a new road, or say fix a park.

The kids liked the idea of fixing parks. They wish that their local park would get an upgrade. Maybe we could write a letter to see what can be done.

  • Do you know what superannuation is?

No, the girls said.

I then explained about superannuation. It is when you save for your old age. When you no longer have a job. I told the twins that when they no longer work anymore they will need money to live off, so superannuation is a big savings account for you when you are older.

The sooner you start saving the better off you will be. It works on compound interest which means the longer you squirrel away your money the better off you will be. I told the girls that as soon as they start work they need to start saving for their old age.

It is sad that women still often have less super available when they retire. I, like other women, have taken a break from the work to care for children and therefore don’t have the funds to put into my super account. I just hope that it is not being eaten away with fees.

  • One thing that can be done to help women with superannuation savings is if their partner also contributes. This way women can boost their savings.
  • Another tip to increase women’s super is to have an auto payment setup, just put a little in each week or fortnight.
  • I need to do both to boost my earnings for old age.

 

Did you know:

“In 2013-14, Australian women aged 60-64 had on average $138,150 in super savings which was less than half of the average male.”

The twins asked why women tended to have lower savings when they retire? I told them that most of the time women look after kids and become carers for family members. This means less paid work and less savings. They looked angry about this and annoyed. I told them it is not good and it means they must be clever and start saving early. (I thought it was good that my girls are angry about this. I hope that they use their anger to save and have enough money put away for when they are not working.)

The kids have savings accounts that we regularly contribute to. I hope this helps them for their future and shows that saving money is helpful. You don’t need to be rich but money does help. Money gives you choices, money gives you freedom and the ability to choose what you do.

Schools can only teach kids so much. Parents need to have the conversation about money, tax, and superannuation at home. If you start good money habits when young it will help you for the rest of your life.

Organising more money to go your superannuation account. Save now for later.

Organising more money to go your superannuation account. Save now for later.

Did you know:

“Most young people do not check their accounts regularly or change investment options, and only one third read their periodic statements.”

It is best to keep one superannuation account and have all payments put into this. If you have multiple funds, if you do indeed have multiple funds it is best to consolidate into one fund. This will mean that you are not paying multiple fees and insurance.

The Money Smart Website has wonderful advice and calculators for savings and superannuation. The website also has great information on how to teach kids about money and great cost effective after school activities.

Tax, Super and You Worksheet for Years 7-10. Although this worksheet is for high school kids, some ideas are still able to be discussed with younger kids. Have a look at the worksheet and start the conversation with your kids today.

The ATO also assists new businesses get up and running. The ATO also can help small business with grants and assistance.

Have you chatted with your kids about tax, money or even superannuation?

If you have what did your kids think it was all about before they really understood it?

I hope this helps starts the conversation with your kids about money. I have always chatted to the kids about money, savings, and the fact that they will need to save once they start working.

The sooner you have the chat the better things will be, the kids will know more, be empowered and you never know might save a fortune to look after their parents. (You never know, right?)

 

Happy Saving!

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