Telling a child the only two guarantees in life are death and taxes may be an appropriately terrifying expression for the Halloween season. But it’s probably not the most relatable or appropriate statement to make when trying to build the foundation for a money-savvy kid.
Instead, imposing a candy tax provides a simple way for parents to start explaining such an important financial topic to children in a way that is relatable.
By levying a candy tax against your child’s trick-or-treat loot, you can help them experience the emotional roller coaster of forking over part of what they earned to a larger entity.
How to tax and teach
Simply stealing a bag of Skittles and calling it a candy tax probably isn’t the strongest approach to a lesson in taxes. However, with the right strategy, it’s a great way to start financial conversations early.
To help you execute this plan flawlessly, here are a few steps to follow:
Step 1: Once the child dumps the candy out on the table, let them evaluate it for a minute.
Draw a correlation between the haul of candy and how mom and dad go to work each day to bring home money. Similar to trick-or-treating, there’s an action done in exchange for a good.
Step 2: Now it’s time to mention cutting a check to Uncle Sam.
Pick up a piece of candy (preferably a decent piece like a Snickers and not an orange-flavored Tootsie Roll) and explain that when mom and dad earn money some of it goes to the government as a tax.
Step 3: Be sure to explain what taxes are used for.
If your child is in public school, perhaps mention taxes help fund school books and lunches or that the streets you drive on are maintained using tax dollars.
You could even mention that community services like the local library are supported with tax dollars. Using specific examples of what your child interacts with will make it an easier concept to understand.
Step 4: Now it’s time to drop the hammer. You are the government and your child is the taxpayer.
Because you helped purchase and/or make the costume, and you went out to supervise trick-or-treating, your child should be willing to give up some of the earned candy for the collective, greater good. (In this case, the “collective, greater good” being your taste buds.)
Step 5: Brace yourself for some backlash!
You’ve probably seen the Jimmy Kimmel Halloween prank where parents pretend to have eaten all of their kids’ candy. This may not be much different.
You could end up with a screaming six-year-old dressed like Captain America and hopped up on sugar.
Step 6: Keep it up year after year.
Use this method as a foundation upon which to have other financial conversations.
As your child gets older, the conversation will continue to evolve. Eventually, you’ll start having more sophisticated discussions about not only taxes but other important financial topics. Help them further learn about taxes in ways such as showing them tax calculators and articles on how to plan for taxes.
Taking advantage of teachable moments like this will help your mini-mes jump-start their way to becoming financially responsible.