The fiscal cliff hits home

The fiscal cliff hits home

Do you understand it? If not, here is a cool video featuring legos and superheroes that can help.

Money is a family matter, and the fiscal cliff has arrived. There are many new tax codes that will play an important part in your finances.

Now that you (hopefully) understand it, will you tell the kids about it?

I’d love to hear all about it, please comment below.

I told mine I was writing about the fiscal cliff on my blog. They asked, “What is it?” I am going to have the kids sit down and help with the taxes (maybe). With all of these changes, money is going to come up.  Perhaps the lack of it, regarding how things are going to be “different” now.

When it does, parents and children may find themselves on “opposite sides of the isle” regarding finances. The kids want new clothes, every new phone that comes out and lots of apps and games.  The parents are thinking about the monthly bills, educational expenses and the much needed vacation that is actually across state lines.Those are the conversations we have in the best of times.

These are not the best of times. Now it’s all because of something called the “fiscal cliff” (it really sounds quite villanous). But this is just one of many fiscal cliffs the family will face.

The family fiscal cliff (or a “cut-off” as I like to think of it) shows up anytime circumstances force us to rethink our finances. Like the time my phone got “cut-off”.  Just kidding. A fiscal cliff comes when we have to decide who or what to cut-off to make it out of the financial rut. It’s when the status quo (i.e., flavored coffee) has to go.

College tuition, divorce and eldercare are their own versions of “fiscal cliffs” the family may have to face at some point. Not to mention, when a natural disaster destroys what we have spent most of our lives building. Thanks to the goings on in Congress, the cliff is a hot topic that re-focuses our thinking on ways to optimize three key areas of personal finance:

Income
Spending
Taxes

We will need to explain these issues to our kids over and over again, so that they learn why it is important to have a financial plan for living.

So this fiscal cliff is a good time to discuss INCOME with the kids.  Aside from getting a job, help them figure out what skills can be turned into entrepreneurial ventures to earn income. Who knows, your kid could be the boss someday!

To cut SPENDING it is a great time to get recycled or refurbished items, or get items that you do not need to have “new”.  It is a good time to help young people figure out wants versus needs and the value of a dollar, when there is less of it to go around.  Premium cable, regular cable, no TV or no phone.  Now that’s a discussion that brings value and values into the picture.

To lower TAXES is also a great time to make tax deductible donations to charity, which includes your stuff and your time/talent.  Just make sure to get a receipt.  Flexible spending accounts are also a good way to lower taxes and always consult with your tax professional to get the best advice.

Finances are on ongoing juggling act to figure out what works at every stage.  Help children learn the language of money by discussing real world issues with them.  It will inspire their confidence in you and yours in them.

Things that happened in the past, will probably happen again in the future.  Help the kids get skilled at navigating the fiscal cliffs in their lives.

Tell them I said “Different is the new normal.”  I am a mom and I approve this message.

 

********

Candi Sparks is the author of children’s books about money “Can I Have Some Money?” Max Gets It! Nacho Money and other titles. Her upcoming titles include “Sold Out“and “Smart & Pretty” and these books for young people focus on building community and entrepreneurship. She is the Dean of Young and Rising Moguls at World of Money and a Brooklyn mother of two, on Facebook and Twitter (Candi Sparks, author).