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Financial Tip

Oliver Wendell Holmes, former Justice of the United States Supreme Court, once said, "Taxes are what we pay for a civilized society." Although people work hard to meet their needs and the needs of their families, there are some things they cannot purchase themselves. For example, the taxes paid to state and local jurisdictions help pay for police and fire protection. These taxes also pay for the operation of the local governments, and for local recreation areas such as parks and other public facilities.

On the national level, federal income taxes help pay for defense for the country. They also pay for capital facilities such as highways and other transportation services, and to help those who are poor or ill. These are all services that individual citizens cannot purchase the way they can buy food and clothing and the other necessities of life. When people live together in a society, all of its citizens bear the cost of providing such services. Taxes are the means by which the society raises the money to cover these public costs.

The United States Department of the Treasury has a number of fact sheets that can help people better understand the various taxes imposed in the United States. These include: Economics of Taxation explains how taxes support government services and benefit the country's citizens. Writing and Enacting Tax Legislation explains the process for developing and passing legislation into law.

In addition, Lesson 1.5 of the Yes, You Can Curriculum includes classroom examples of how taxes are collected and used by the various jurisdictions.

Source: Adapted from United States Department of the Treasury.

Do I Really Need a Vacation?

Overwhelmed by work, school or an overloaded daily schedule? If not managed properly, stress can reduce your productivity and lead to higher medical and healthcare expenses.

While intuitively we may realize it's not wise to work continuously without a break, often times we get so caught up in our day-to-day responsibilities we overlook the importance that time away from our daily routine can provide. It's easy to underestimate the value of vacations, especially when things are going good. But, not unlike a computer that sometimes has to be rebooted in order to work more efficiently, people can also be reenergized by taking time off. 

A recent "vacation deprivation" study by Expedia.com found that Americans who had an average of 14 annual vacation days had left four days unused in the previous year. Another poll, conducted by the Society for Human Resource Management, found that HR managers "strongly believe that you will be a better worker if you occasionally unplug from the job," reported Diane Stafford in a "Workplace" column last fall in The Kansas City Star. "No breaks make for unhappy, unhealthy workers and ill-served employers," she wrote. 

Melissa Campbell, Human Resources Benefits and Operations Manager, at American Century Investments agrees. She notes that "vacations are designed to support work/life balance, so employees can recharge their batteries and come back refreshed."

Particularly for young adults starting their careers. "It's a good idea to try new things outside of work," Melissa suggests, "and expanding their social network can lead to future opportunities."

Outdoor activities and charities such as Habitat for Humanity or volunteering at a youth camp "are especially helpful in creating a better work/life balance," she added, "not to mention the new experiences can add skills which will make them more valued employees."

Even if your employer allows you to carry over vacation days from one year to the next, it can feel good to take them as they're earned. Here are some suggestions for planning time off:

  • Schedule your vacation months ahead so it won't interfere with peak work periods.
  • Start a separate vacation savings fund so you won't have to go into debt to pay your travel expenses.
  • Buy airline tickets in advance to realize the greatest amount of savings and increase your commitment to taking your vacation.

You can also take mini-vacations throughout the year:

  • Take your birthday off to pamper yourself with some "me" time.
  • Arrange to take Friday afternoons off for a month.
  • To avoid the busiest travel times, add an extra day or two to a three-day holiday. 

For a longer leave of a month or more, approach your employer about taking a sabbatical. In academia, sabbaticals are often used for conducting research or writing a book, while in the corporate world employees often use them to completely recharge, learn new skills or refocus their career goals.

In an article he recently wrote for Entrepreneur Magazine, Richard Branson, Founder of the Virgin Group, shared his thoughts on taking a vacation from work. "When you go on vacation, your routine is interrupted; the places you go and the new people you meet can inspire you in unexpected ways."

Teachable Moments

Next time you plan a family vacation, be sure to include your children in the planning process. Discuss your destination options then let your children pick one of the activities or a "point of interest" to visit.

Create a vacation fund and encourage everyone in the family to contribute with the promise that the higher the balance, the greater opportunities to enjoy more experiences. If your children work, encourage them to add a percentage of their earnings. If they aren't employed, suggest they do some chores around the house or for neighbors to earn some spending money.