By Hadassa Ferreira, Staff Writer
Many people do not understand the burden of adulthood until the tax season arrives, or it is time to deal with finances.
Everyone passes through that phase of teenagerhood in which adulthood seems to be the most expected phase and the best event possible in life.
The truth is, by the time people grow, they obtain more responsibilities, and fiscal liability knocks on people’s doors as soon as they reach financial maturity.
In the month of April, there is the tax season. Most young adults new to the job market and financial independence are not familiar with the importance of managing their money to deal with their fiscal liability in the best way possible.
In the U.S., taxes are mandatory contributions imposed by the government on individuals or corporations to collect tax revenues to finance government activities such as public works, services, and programs. A good example of these are Social Security and Medicare.
The taxes are applied to some sort of money received by individuals, such as salary, money earned from investments, interests people receive as an additional income, etc.
The amount of taxes an individual owes increases by the time their income also increases. This is why in the U.S.; wealthier people pay a higher amount of taxes than people with lower incomes.
The tax system is an important part of the American nation, and because of this, financial literacy is essential, specifically for young people who are not very knowledgeable about money management and financial planning.
Youngsters tend to be focused more on the present instead of thinking about the future or eventual economic challenges. This refrains them from planning their financial life, prioritizing their finances, and budgeting.
“Once you have an understanding of basic budgeting, planning, and investing strategies, some focus on how the tax system works and how you should navigate the tax system would be very beneficial,” said Professor Zachary Smith from the economics department.
An intelligent and effective financial plan is very important and can meaningfully shape a person’s tax liability.
Learning how to plan the destiny of your money and the most profitable ways to keep it allows people to navigate their tax civic obligations more confidently and effectively.
Financial literacy should be taught in schools and universities because it better prepares students for when they enter the job market and start receiving payments.
“The reason why financial literacy courses should be mandatory is that they will provide knowledge to improve our students’ life outcomes and help our students avoid debt traps,” said Smith.
Preparation in financial literacy would allow them to keep track of how their money flows and the possible taxes they might owe.
Through this type of knowledge, students can create and adapt financial plans that will lead them to tax-saving opportunities and make them financially successful.
“In our financial planning and wealth management courses taught in our minor of finance program at Saint Leo University, students are exposed to planning and budgeting and investment scenarios that teach them about the importance of planning and the impact that it has on a families’ life outcomes,” said Smith.
Financial literacy incentivizes students to look at money from a progressive perspective, managing their money to promote not only short-term consumerist pleasures but financial stability in their futures.
Through financial literacy, students can learn how to have responsible financial behaviors, such as saving for retirement or increasing their extra income in the long term.
It helps people to increase credit scores, lower loan delinquency, and reduce the use of risky services. Moreover, it enables people to deal with their own money in the best way.
In a world where setbacks can happen easily, financial literacy is crucial as it can overwhelmingly improve a person’s life.
