EduCounting

Episode 97: Get MAD about your finances this month!!

Financial literacy month with Mak and G

SHOW NOTES

This episode, Mak and G look at the different types of taxes, when you have to pay them, and why it’s important to start early…

 

It’s financial literacy month so we’re looking at what this term really means and how people can improve their financial literacy.

 

Mak and G talk about the world of taxes, the different types we have to pay, and when we have to pay them.

 

We also talk about how people have used their stimulus checks to improve their futures and how I’ve been saving money over the pandemic…

 

“Our lives have changed and it’s easy for me, as a kid, to see mom and dad are spending less on things.” – Mak

 

“There’s a tax for cow farts, and there was once a tax for human pee!” – Mak

 
Time Stamps:

00:25 – Our weekly market updates.

01:18 – The tax filing deadline and when to seek advice if you’re managing your own taxes.

02:42 – Different types of taxes we have to pay and when to pay them.

03:42 – What ‘financial literacy’ is and how to improve yours.

06:29 – How people have used the financial stimulus cheques to improve their futures.

07:27 – How I’ve been saving money over the pandemic.

09:20 – The importance of getting in the right mindset and committing to your finances.

 

Resources:

Weird Tax Facts

Jumpstart Coalition

 

Connect with Ben Jones:

 

TRANSCRIPT

DAD: Hello and welcome back to Money with Mak and G. This is for the weekend in April 9 2021. Don’t forget to like, subscribe and comment on the podcast because we would love to hear from you.

GRANT: And make sure to click that bell to turn on post notifications.

DAD: Thanks, G. Hey, Mak, do you think you can kick us off on the markets today?

MAK: Yep, hello, everybody. Over the last two weeks, the market continues to move into positive territory. The Dow is up over 10% year to date and the s&p is almost double digits as well. There are continued signs that the economy’s strong, however, it’s a bit hard to believe that NASDAQ trails both of them, but it’s still up a solid 8% up so far this year. These can all be considered big gains with just over three months under our belt.

GRANT: Bitcoin is back to overall 100% gain in 2021. As we continue to hear more about it and whether it will make the mainstream. You can now pay for a Tesla with it and other companies are willing to take the currency as payment as well. Apple surged last week and was up over 8%, which appears to be information surrounding earnings. However, we’re almost back up to breakeven because we rode the price of Apple down over 10% this year.

MAK: April has always been tax time for dad as April 15th is a tax filing deadline for individuals. It was March 1st in 1913, which was the first year of a federal income tax. It then changed to March 15th in 1918, and again to April 15, in 1955, where it has stayed. Last year was the first year it wasn’t April 15th other than holidays and weekends. But now it is the second exception and your taxes are due May 17th which gives you a little breathing room.

DAD: Quick note on taxes. If you ever plan on managing your taxes because you have a large deduction, credits to take, 529 money to save for college, business losses, investment issues, IRA contributions and more, I will tell you over and over to seek advice in September before the year ends at the latest. Depending on your situation there could be many strategies to use. But doing it after the year ends is not the best idea.

GRANT: Tax Freedom Day this year is April 17th. If you look back about a decade, it ranges from April 16th through April 24th. It’s about 30% of the entire year is dedicated to taxes. Ouch. If you haven’t seen a weird tax facts video on the EduCounting YouTube channel, it’s pretty interesting stuff. There’s a tax for cow affords and there is also a tax at one time on human pee. Anyway, Tax Freedom Day tells you how long you would literally have to hand over your entire paycheck to cover your taxes. After that day, you get to keep the rest because you’re free from any more taxes. You can think about the month of January being used to pay off federal income taxes. February goes towards paying Social Security, Medicare and other payroll taxes and March you can pay state and local sales tax as well as property taxes. Then the first 16 days of April you work to pay motor vehicle license taxes as well as state taxes. You also get a pay all corporate income taxes.

MAK: What we pay corporate taxes?

GRANT: Yep, those are literally passed on to you through the higher prices of the products they sell. I know it’s crazy.

DAD: Do you know what is really important and sneaks up on you? Other than how turning 50 sneaks up on you. It’s Financial Literacy Month. Can you believe it? It’s the month of April, hard for me to focus on taxes and then Financial Literacy Month. What is financial literacy? The easy definition is being good with money. Literacy can mean the ability to read and write or in our case, it’s about having some knowledge about something which is handling cash. I like to think of it as knowing the FBI, financial budgeting and investing. You have to do your financial management by making good money decisions. You budget what you can spend and save, then you invest your money wisely. They should definitely give us a shiny badge for that, like the FBI.

MAK: Literacy Month is run by something called the Jumpstart Coalition. And it started in 2000. The government got involved in 2003 when Congress asked George W Bush to declare April financial literacy for youth month. Then in 2004, it was named National Financial Literacy Month. Then in April 2005, the US House of Representatives passed a bill supporting the goals and ideas of Financial Literacy Month. I’m starting to see a bit of bureaucracy here. Anyways, it’s called for President Bush to issue a Proclamation, which is a fancy word for making a public announcement. It asks at the federal government states, localities, schools, nonprofit organizations, businesses and people of the United States to observe the month with appropriate programs and activities.

GRANT: President Obama did a proclamation at least twice during his presidency, and President Biden has already done one on March 31st 2021 concerning financial literacy. A lot of it is education and information. You can find quite a bit of resources online. While we were in Chicago dad became aware of Money Smart Week, because it was an activity sponsored by the Federal Reserve Bank of Chicago during April. And if you like money, you can see some very interesting facts about money at their offices in downtown Chicago. Anyway, it began in 2002. If you go to moneysmartweek.org, you’ll see the activities they’re doing this month. It goes from April 10th, to the 17th and includes speakers from the Internal Revenue Service, FINRA, the US Department of Education, the University of Chicago and more. Sign up and check it out.

DAD: So take advantage of the opportunity to get some free insights and free advice during National Financial Literacy Month. As we continue to work through COVID, I read something that made me incredibly happy to see a significant number of people have taken the opportunity during COVID to make their financial situation better. There was a survey run of 1000 adults recently. They were asked about their financial outlook and 93% reported that they were optimistic about their financial outlook this year. We’re seeing a large increase in spending and estimates are much higher than anticipated. So this is all good news. The survey also revealed that people may be relying heavily on federal assistance to get ahead, but using it for the positive about 40% plan to use the latest round of stimulus to pay down credit card debt, about 27% will use it to catch up on past due bills, and about 29% will use the extra cash to increase their emergency fund. I read something I almost didn’t believe when you think of all the people hurting during COVID. People have been able to save an extra $1 trillion over the last year even though it’s been a bit disproportionate.

MAK: Our lives have changed and it’s easy for me to see as a kid that mom and dad are spending less on things.

GRANT: First, Dad’s clearly not going into work as often as he used to.

MAK: Yeah, he moved the location of his business closer to home, but many days he just stays here and works. So he spends less on gas as well as car maintenance, which includes oil changes, brakes, wear on his tires and more. Plus, to be honest, he may need to upgrade his wardrobe. He hasn’t had to buy any new clothes in months. He had a good amount of clothes before. But since he doesn’t see people as often it’s not a priority.

GRANT: I think Dad has also saved money on soap and shampoo too. Dad normally got up for work each day and was driving to the office long before he went to school. Now he may or may not take a shower every other day. It’s a little gross, but he tells you this kind of normal. Plus, I know he’s not having a lunch meetings anymore. With his day pack in the office, he had meetings at restaurants to catch up on stuff or with the people he works with. But he doesn’t have to do that anymore. Eat smart home, which also saves money. Overall, it’s an opportunity to work on your plan, get on track and invest.

DAD: The kids have a point. It’s another opportunity to save and if you received another stimulus check, paying down high interest debt like credit cards, catching up on bills or building your emergency fund is huge. With Financial Literacy Month, I think it’s worth touching on some big picture items that we’ll explore over the next couple of weeks. I just read an article about the 30 things you can do over April to get your financial house in shape. You can start it at any time, though, I’d always suggest the sooner the better. Right now, I’m not going to go into much detail. But just like anything you plan to do, you have a couple of very basic steps. Get in the right mindset, assess your situation and then do the work.

MAK: It sounds overly simple. But before jumping into a new sport or other activity, we have to get into the right mindset and commit with the cross we evaluated the schedule, asked ourselves if we wanted to be part of it. And then we had to make a commitment.

GRANT: Assessing our situation in regards to lacrosse was pretty easy. We were beginners. I was glad after I did my research that Lacrosse has changed over time. I guess the Native Americans used to play and prior to going to war. You were viewed as a coward if you dodged an opponent, so it was better to run them over and fight through the pain because war was pain.

MAK: Anyway, we lacked some key items like the right equipment, practice and other help. We knew that we might be better in some skills versus others. How to handle the ball is brand new, especially when using a stick with a little nut at the end. But we know how to run pretty well. Well needed a lot of practice and coaching to learn how to effectively play the game.

DAD: Then the kids will have to do the work. That will mean conditioning, understanding the game and strategies. It also means lots of practice and realizing that it takes time to get it right and keep your skills sharp. After reading the 30 steps in the article I mentioned earlier, I found out that those items are pretty evenly distributed between the money mindset, assessing your situation and doing the work. Maybe we should call it the MAD approach to your money, mindset, assess and do. M A D mad, it does make sense. I believe the mental aspect of being financially successful is just as important as doing the work and assessing your current situation. We want to make it really easy to digest. So let’s work on some of these over the next couple of weeks in honor of Financial Literacy Month. Thanks for being here, and we’ll see you soon for more and don’t forget to like, subscribe and comment on the podcast. And don’t forget to check out the EduCounting YouTube channel for lots of video content. Until next time. Bye!

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