10 Reasons You Should Show Your Child Your Paycheck

Use these tips to help teach your kid about taxes, income, and money management.

Ten Reasons You Should Show Your Child Your Paycheck

Children are quite curious! You can find them always asking one question or the other. When you answer their questions, as the parent, you will enlighten them and, inevitably, prepare them for life.

For many reasons, some parents feel it is wrong to let their children in on their financial situation. However, in this article, you will learn just how important it is to teach your children about finances by showing them your paycheck.

Reasons You Should Show Your Child Your Paycheck

You’d be surprised the many benefits come from being financially open with your child. Here are the top ten reasons you should consider showing your child your paycheck.

1. It will show them that getting a paycheck is a significant part of adulting

Children cannot be children forever, no matter how much you want them to be. So, parents have to help their children prepare for the adulting stage and its responsibilities.

One of the duties of an adult is to get a job and provide for themselves. Your paycheck is proof to them that adults work, and when they work, they get paid.

2. Showing your child your paycheck helps them understand gross vs. net pay

Gross pay is the amount of money an employee earns before taxes, benefits, and other deductions are made. On the other hand, net pay is the amount that remains after these deductions.

This concept may be confusing to children, but showing them your paycheck gives them a practical example of both concepts and aids their understanding.

3. They will have an understanding of where your money comes from and goes

You know those topics that seem difficult to explain to children? Where your money comes from and goes falls under this category of “difficult to explain” issues.

However, by showing your children your paycheck, you could enlighten them on how money comes into your family and what you spend it on.

4. It will help them understand the deductions that are taken from your pay

Deductions are regular in paychecks, but each deduction is valid. Showing your children your paycheck will help you explain what each deduction is for and why it is essential to remove the deductions.

These deductions include medical and dental benefits, 401k retirement plans, federal and state income tax, and many others. These are beneficial to us and need to be understood at a young age.

5. It will help them understand taxes

A tax is any money that the government mandates for people to pay according to their income. These taxes reflect on your paycheck, and they are of various types.

When you show your child or children your paycheck, you will be able to walk them through the taxation process and why taxes are paid. This will encourage them to pay their taxes when they are older.

6. Showing your children your paycheck will help them understand employer benefits

Employers give benefits to their employees, which are either a mandate from the government or a reward for hard work. Employees get four main benefits from their employers: medical insurance, life insurance, retirement plans, and disability insurance.

These benefits reflect on your paycheck, and you can use the paycheck to explain to your children what each benefit is for.

7. When you show your child your paycheck, you teach them to understand investing and retirement

Investment and retirement are two major topics you should introduce to your children. One way to do this is by showing them your paycheck. Of course, after a successful career, you would want to rest and enjoy the fruits of your labor.

A retirement plan such as a 401k retirement plan will come in handy as you grow older. Your 401k plan is made up of the money you invest during your working years to cater for you after retirement. With your paycheck, you can teach your children about this.

8. It will give them insight into how you budget

Budgeting is essential as it attracts several advantages for you. Having a budget helps you manage your money well and ensure it lasts until your next paycheck. When you tell your children how much you earn, it will help them understand budgets.

Additionally, showing your paycheck to your children will teach them to make more reasonable demands to fit in with what you earn.

9. It will teach them about the purpose of certain taxes

The government collects taxes from citizens to provide revenue and redistributes wealth from the rich to the poor. The revenue taxes generate for the government helps to build roads, helps with immigration, funds public schools, and does many other essential things.

Now, you can explain this to your children with the help of your paycheck.

10. Showing your child your paycheck improves their attitude towards money

Over the years, many people have developed poor spending habits and negative financial habits. This is mainly because we don’t talk about money enough; we hide how much we make and how much we spend. This is not healthy.

Showing your child your paycheck and fostering financial discussions prepares them for adulting and makes them confident enough to address financial issues. This means they understand employers who try to cheat them and embrace healthy financial habits.

Prepare Your Child for Financial Management

As you can see, there are a lot of benefits your children can get when you show them your paycheck. To further boost their knowledge about financial management, you can enroll your children in online courses that would educate them on all they need to know about finances.

An online college like Adultology offers various courses on finances and financial management. Sign them up today for lessons that will leave a significant impact on your children’s future.

Categories: Financial Planning and Investing