Why I’m Grateful I Grew Up Without Money
When I was younger, my family didn’t have a lot of money. My parents were just starting their life together when I was born, and neither of their families really had much money, so they started out with very little.
My wardrobe for school consisted of secondhand clothes, knock-off shoes, and the occasional clearance item from regular stores. When I was old enough to become more cognizant of material items, I began comparing my clothes to the brand name clothes that my friends wore. I got made fun of at school for wearing “fake Vans,” as well as for wearing my favorite shirt two days in a row. I remember once that I wanted to keep wearing this particular black pair of shoes so badly after they faded that I stole a Sharpie from my teacher and colored over the parts that had worn. I always wore a shirt underneath my P.E. shirt so that when we changed, no one would notice that I wore the same bra every day. At lunch my friends and I would stand in line together, and when I got to the front, I would pretend like I wasn’t hungry because I didn’t have money. Some days I would ditch my friends to sit in the bathroom and eat the lunch I’d brought from home, but most of the time I’d just sit with them and forgo lunch instead.
I got a job as soon as I was old enough and splurged all of my paychecks on the luxury goods that I had always wanted but never had. I got my hair done frequently, bought expensive makeup, brand name clothes, shoes, jewelry — you name it. Each week, I’d plan out what I was going to buy when I got paid and I spent my money very quickly. I thought my things would increase my worth as a person, and honestly, I didn’t care about anything else.
During that time, I didn’t feel valuable unless I had the newest and nicest things. How the world viewed me and what others thought meant everything to me. The thing is, sometimes I didn’t even want certain things but felt like I had to buy them — my spending habits and routines soon began to spiral out of control, and after a few years I found that I was stuck in a never-ending cycle. I got tired of struggling to pay my bills and owing people money. I started to realize I would never be satisfied with my quality of life this way, and that I would need to find a place somewhere in the middle in order to be happy. I began cutting back on my spending, saving instead and truly thinking about whether I needed things before I bought them.
Now I am careful with how I spend my money, especially because I’ve become more financially independent. I choose to buy the majority of my clothes at thrift stores, and wear very little makeup. My hair is short, and I usually either have my mom cut it or I cut it myself. These days I choose to be pretty low maintenance, and I spend most of my money on food, school and bills. Instead of feeling like I need to buy material things to have personal worth, saying “no” to something at the store that I don’t need makes me feel happy and free.
Don’t get me wrong: There are still days that I get down on myself when I see my friends living more luxuriously, traveling frequently or spending a lot of money on food and clothes that I simply don’t have the budget for. But then I remember where I started, and that not everyone came from the same place as me. The bad feelings go away a lot quicker nowadays, and when I think about my past and how far I have come, I feel proud of myself.
When I think about the person I am now, I know that not having money when I was younger taught me a lot. Because of my struggles I know how to save, and how to be smart with my money. Having less for most of my life helped me to be content with less now, and I value the things that I have now much more than I would have if I’d never learned to appreciate them. Not having everything I wanted taught me to be flexible, creative and imaginative. It also forced me to work hard and earn my own way through life. I’d like to think that it taught me balance, and that I’ll always be happy with what I have, regardless of how much or how little.
Did a challenging experience help shape your understanding of yourself? Tell us @BritandCo.
(Images via Marisa Kumtong)
Welcome to Selfmade Finance School, our new money series with Block Advisors to help small business owners with their tax, bookkeeping, and payroll needs year-round. This week, we explore the tax implications of bringing family members into your business.
The question for today is this: Does hiring your family members make sense for your business? Let me be clear. This is not a piece about whether hiring your family members makes sense for your relationships with those family members. As someone who is part of a family business, I could fill up a lot more than 600 words on my opinions about that. For today's purposes, we focus on whether it makes sense from an overall "good business and tax implication" perspective. As it turns out, there is a decent amount of tax nuance when it comes to employing your family. Let's break it down based on relationship to the employee:
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Spouses Who Are In Business Together
Personally, if I had to be in business with my husband, it would not go well. However, many couples build viable, strong businesses together and I say, good for them! Depending on how you have your business entity structured, it will make a big difference on the tax treatment of you and your spouse working as partners. Because a business jointly owned and operated by a married couple is generally treated as a partnership for Federal tax purposes, the spouses must comply with filing and record keeping requirements imposed on partnerships and their partners. The election to file two Schedule C (Form 1040) forms, (one for each spouse) permits certain married co-owners to avoid filing partnership returns, provided that each spouse separately reports a share of all the businesses' items of income, gain, loss, deduction, and credit. Under the election, both spouses will be subject to self-employment tax and on net earnings from self-employment and receive credit for Social Security earnings.
One Spouse Employs Another
If you have a dynamic where your spouse is an employee of your business, then your spouse's wages are subject to income tax withholding, Social Security and Medicare taxes. If you are self-employed (not a corporation or a partnership), your spouse's pay does not have to be included in your federal unemployment tax account (FUTA) contributions and payments. However, if your business is a corporation or a partnership you must include that spouse's pay in your unemployment tax contribution calculation.
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You Employ Your Child
First, let's be clear. I work in my family business, but I am an adult, so I am treated just like a normal employee. However, if you, for example, run a family restaurant and want to hire your children under 18 to work for you, there are some tax benefits. But first, you should check with your state for rules on how many hours minors can work (in non-agricultural jobs) and reference the Fair Labor Standards Act for information on limitations on the kinds of work children can perform.
"This is an often overlooked or under-utilized strategy. Paying your children for true services they provide in your business can be a powerful tax-saving tool," says Cathi Reed, Block Advisors Regional Director. "If you are a sole-proprietorship or single member LLC, and the child is less than 18 years of age, the business is not required to withhold FICA or payroll taxes. The child can use his or her standard deduction against income you pay."
You Hire Your Parent
Oh dear. If you are brave enough to do this, know that you will need to pay Social Security and Medicare taxes on your parent's wages and make the appropriate withholdings, but you don't have to pay unemployment taxes. Now all you have to do is convince your parent that you are the boss. Have fun with that!
Is Hiring Family Members Worth It For The Tax Benefits?
"There are some positive tax advantages to hiring family members. It's important to treat a family member like any other employee. Hiring your children can result in substantial savings for businesses. Make sure your child has real, age-appropriate work to do and a reasonable pay rate, comparable to other employees. Consult with a Block Advisors small business certified tax pro to ensure that you are complying with all requirements," advises Reed. "Block Advisors, a team within H&R Block, is dedicated to meeting the tax, bookkeeping and payroll needs of small business owners year-round. To start working with the tax experts at Block Advisors, visit blockadvisors.com."
In my opinion, you should not hire a family member solely because of the tax benefits. You should always hire based on whether that person is right for the job and keep in mind how this hire could materially impact your relationship with that person and others in your family. Finally, as I mentioned, make sure you have a tax professional on your team when making these determinations. As you can see, things can get a little tricky!
*All details were sourced from IRS.gov and blockadvisors.com