Jim Rohn on Taxation – The Goose That Lays the Golden Eggs

One of the original Financial Fairy Tales – The Goose That Lays The Golden Eggs tells the tale of a farmer with a steady and reliable stream of passive income. Sadly he gets greedy and ends up killing the source in the search for instant gratification.

In this article, one of my mentors Jim Rohn uses the Golden Goose story to discuss taxation. Here’s what he had to say:-

I realize that the topic of  taxes may seem like a strange place to begin the discussion of creating wealth.  And yet throughout our lives, whether young or old, we must learn the necessity  of paying taxes. And as soon as they have any money at all, our children, too, must  learn that when they spend money they immediately become consumers. And all consumers  of goods and services, no matter how young, must pay taxes. Why?

Because we have all agreed  to live as a society, and for that society to function properly, there are some  things we cannot do for ourselves alone. For example, we cannot each build a piece  of the street. The machinery would be too expensive, and it would take too long  to learn how to use it. So we have a government. And a government is made up of  people who do things for us that we cannot or do not want to do ourselves. Because  the streets, the sidewalks, the police, and the fire department must all be paid  for, we’ve agreed to add some money each time we buy something and give it to the  government.

We then move on to federal  taxes. Here is a good way to explain federal taxes. I call it “The Care and Feeding  of the Goose That Lays the Golden Eggs.” It’s so important to feed the goose-not  to abuse the goose or tear off its wings-but to feed and care for it.

What’s that you say? The goose  eats too much? That’s probably true. But then, don’t we all eat too much? If so,  let not one appetite accuse another. If you step on the scales and you’re ten pounds  too heavy, you’ve got to say, “Yes, the government and I are each about ten pounds  too heavy. Looks like we both eat too much.” No question about it. Every appetite  must be disciplined-yours, mine, and the government’s. Hey, we could all go on a  diet!

My mentor, Mr. Shoaff, urged  me early on to become a happy taxpayer. Now, I must admit it took a while, but I  finally did become a happy taxpayer. Part of this transformation occurred when I  began to understand the function of taxes and that it is right for everyone to pay  his or her fair share.

I finally decided I didn’t  mind picking up my share of the tab for defense. It’s so necessary for our safety  as a country to keep the bullies away. Some people say, “Why bother with all that  expensive equipment? They won’t come over here.” Obviously, those people haven’t  been reading their history books.

Others say, “We’re not about  to pick up the tab for defense.” Well then, I suggest they go to a place which doesn’t  offer defense as part of the package. If one is going to enjoy the benefits, one  should pay a share.

Now, let me add this: Don’t  pay more than you should. By all means take advantage of the incentives. They were  given to you as a reward for channeling your money into areas the government thinks  helps the economy.

All I’m saying is that when  everything has been computed, all legitimate deductions have been taken, and you  reach that last line on your income tax form, whatever the amount, pay it. And pay  with happiness, knowing that you’re feeding the goose that lays the golden eggs-the  golden eggs of freedom, safety, justice, and free enterprise. Some goose! Some eggs.

 

Generation Y: the (modern) world of personal finance

The case for young people to receive a better financial education has never been  stronger. University education is no longer free, a job upon graduating is far from guaranteed, the housing ladder has been pulled up for many and predictable workbased pensions are a thing of the past.

Yet a survey of 440 young people aged 18 to 25, by the Centre for the Study of
Financial Innovation, found that 64% had not had any formal financial education.
Other findings in a report entitled “Generation Y: the (modern) world of personal
finance”, by the CSFI’s Sophie Robson (aged 26), include:

 Nearly all still visit their bank branch at least occasionally.
 Nearly three-quarters have never used mobile banking – and many of those
are worried about security considerations.
 Many don’t really consider student debt to be debt at all – apparently,
because it is taken directly from their gross pay.
 Most are virtuous – nearly two thirds pay off credit and store card debt within a month to avoid interest payments.
 Women generally tend to have lower savings than men and are less likely to
take investment risks.
 More than four in 10 of those who contribute to a pension do not know what
type of pension they have – money purchase, final salary etc.

Respondents also tended to have a traditional attitude to home ownership – 71%
said buying a house or flat was “very important”. But they were (surely) over-

optimistic about when this might happen: 41% expected to buy in their 20s, and only
10% thought they might have to wait until their 40s. (The average age of first-time
buyers, according to various surveys, is in the mid to late 30s.)
The report is also based on 17 (unstructured) essays by young people on their
attitudes to personal finance. On personal debt, one said: “As far as I’ve ever been concerned, debt is debt. It’s always bad.” But another pointed to the liabilities for  others that generation Y will shoulder: “I’m quite terrified about the monstrous unfunded pension liabilities that my generation will be lumbered with.”
And on financial literacy: “I think banks can rely on a lack of understanding from most  of their customers who miss important clauses in contracts.”

Summing up the need to combat this, one said: “Improving financial literacy among consumers would increase confidence in financial services and managing money; there would be less of the fear which surrounds money and personal finance.”
One encouraging (and surprising) note for the financial services industry is that more than half of the young people surveyed find personal finance “interesting”.

The challenge for the industry is, therefore, to persuade young people that they can use its products and services with confidence and to help those at the beginning of their working lives to develop better financial habits.

Read the full report from the link below:

http://www.csfi.org/files/Generation_Y_by_Sophie_Robson_WEB.pdf

For more information, contact:
Sophie Robson, 020 7493 0173, or sophie@csfi.org
Jane Fuller, 07980 305 278, or jane@fulleranalysis.com
Andrew Hilton, 020 7493 0173 or andrew@economic-evaluation.com

The CSFI is a not-for-profit think-tank, set up in 1993, which looks at emerging
threats and opportunities in the financial services sector. Chaired by Sir Brian
Pearse, it is supported by around 70 public and private-sector organisations.

CSFI
5 Derby St
London
W1J 7AB
020 7493 0173

Peter Jones Launches £100,000 Tycoon in Schools Contest (UK)

Tycoon in Schools has been set up by businessman, entrepreneur and television personality, Peter Jones CBE, with a personal investment of £100,000.

This new enterprise competition is designed to encourage school-age youngsters from across the country to start their own business. The intention is to inspire pupils to pitch business plans to their tutors, in the hope of receiving seed funding.

If successful in their bids, students will have one month in which to commence trading and make a profit from their enterprise. Participants will compete for a place on the Tycoon League Table, by making as high a profit as possible.

Schools taking part in the contest will be given a loan of £1,000 to be allocated to those pupils who have displayed entrepreneurial aspirations. At the close of the competition, the students will repay their original loans to the Tycoon Bank, and remaining profits can be used by the school or donated to local charitable causes.

Schools across the UK may apply for funding through this scheme, on behalf of their entrepreneurial students.

Commenting on his new initiative, Mr. Jones said: “For too long schools across Britain have been calling out for an enterprise challenge to encourage their young people to ‘dream big’.

“Enterprise is the missing piece of the jigsaw in schools today. You can’t start early enough when it comes to learning about enterprise and through Tycoon in Schools we hope to reach young people of all ages and inspire them to realise their potential.

“This is just the beginning of an exciting new campaign to encourage the next generation of entrepreneurs to go for it. Our aim is to grow the competition each year, involving more schools and young people across the country and inspiring them to live out their entrepreneurial dreams.”

Entries must be submitted by 1 September 2012.

Click here to access the online registration form (opens in new window).

Financial Education in New National Curriculum?

Financial education is back on the political agenda as Labour MP Thomas Docherty introduced a private member’s bill in the Commons calling for financial literacy to be included in the national curriculum. pfeg (the Personal Finance Education Group) who are the UK’s leading financial education charity and have been campaigning on the subject for 12 years welcome the bill and the opportunity to further the policy debate.

The bill follows the e-petition launched by Martin Lewis of moneysavingexpert.com calling for compulsory financial education in schools. The petition was one of the first to achieve 100,000 signatures and was debated in the House in December 2012.

pfeg are in complete agreement with Mr. Docherty that financial education ‘should be part of the provision of the national curriculum’. This recommendation was also made by the All Party Parliamentary Group on Financial Education, for which pfeg provides the secretariat, in the Financial Education and the Curriculum report released in December 2012.

Mr. Docherty went on to recommend starting financial education with students aged between 14 – 16 years old. pfeg advocates that financial education should be available to all children and young people aged between 4 – 19 years. This recommendation is in line with the recent Impact Review of Financial Education for Young People conducted by the Money Advice Service, which confirmed that attitudes to money are formed early. pfeg believes that financial education should begin as early on in a young person’s school career as possible and should continue in progressive way year on year.

This is a view strongly supported by Daniel Britton, author of The Financial Fairy Tales which help create positive values and money references from an early age.

Mark Fiander, the Strategy and Innovation Director, at the Money Advice Service said:

“We want everyone to be financially capable. Equipping young people with money skills for life is a key foundation for achieving this goal and we believe an essential building block is the provision of financial education in schools. This is why the Money Advice Service fully supports the work of the APPG on Financial Education for Young People on developing sustainable model for educating future generations. The introduction of Mr. Docherty’s bill – calling for financial literacy to be included in the national curriculum – is a step towards getting this issue back on the agenda. We look forward to the debate early next year”.

The second reading of the bill is due in January 2013. A review in to the national curriculum is currently in progress. pfeg would recommend that discussions on the inclusion of financial education in the curriculum are advanced as soon as possible to guarantee consideration from the Department of Education.

pfeg are firmly of the belief that financial education provision in schools is the most sustainable and ‘catch all’ solution to providing young people with the knowledge and skills they will need to manage their money, make key financial decisions and develop in to responsible consumers on leaving school.

7 Reasons why young people should start their own business

Despite the general doom and gloom about the economy, bank lending and business outlook – now is exactly the right time to start your own business.

Here are 7 reasons why every young person should start their own business

1. Part time income vs. Part time job

If you are fortunate enough to find a part time job, chances are you will be rewarded at the UK national minimum wage of £3.68 per hour (under 18s) or £4.98 (under 21s).

Working 15 – 20 hours per week is barely going to cover your essential expenses, let alone help you save for anything more substantial.

If you applied those 15-20 hours per week into your own business, do you think you may be capable of generating more than the £60 – £100 you are earning now?

2. Follow your Passions

Your own business can give you the opportunity to follow your passions. Do you have hobbies or pastimes where you can literally lose yourself for hours? Would earning money from these ever really feel like work?

Ask yourself the question has anyone ever earned money from doing what I love? If the answer is yes, look for ways in which you can do something like that too.

3. Information Available

With the popularity of TV shows like the Apprentice and Dragons Den there has been a real increase in access to advice, tips and inspiration to start your own business. Even the Government has realised that supporting enterprise is the way out of the recession.

There are more websites, books, TV programmes, podcasts, videos and courses available today than at any other time in history. Chances are your local library has more business advice than you could ever read – for free!

4. Low Cost – Low Risk

There was a time when starting your own business involved high start up costs for premises, vehicles, machinery or other equipment. Banks wanted collateral or security on loans, which meant that aspiring entrepreneurs either needed money behind them or had to put up assets such as a home to get started.

For many this risk was too great and crushed dreams before they could really begin.

The internet is a real game changer. Businesses can be started online for pennies, ran from bedrooms, kitchen tables or even coffee shops. The internet allows businesses to trade worldwide 24 hours per day, while free services such as YouTube, Facebook and WordPress allow you to get your message out to a potential audience of millions.

5. Personal Development

Running your own business can be great fun, but is also likely to involve some effort. The payback is not only financial but can also be measured in your own development. Skills of communication and financial awareness together with qualities of perseverance and self reliance can be by products of the business process.

These life skills will be of benefit whether you chose to remain self employed, employed or enter higher education.

6. Mindset

Allied with personal development will be the mindset you develop as an entrepreneur. The can do attitude, the openness to try new things and explore new possibilities will be of great value to you as an individual and to any potential future employer.

It was once felt that the entrepreneur was a bit of a maverick who didn’t fit well into corporate life. More recently however big business has realised that the flexible, innovative, can do approach is exactly what is needed to move their company forward.

7. Little Acorns – Mighty Oaks

Everything big was once small. By starting your own business you are launching something which one day may be the next Google, Facebook or Marks and Spencer. You don’t need to wait until genius strikes or come up with the next amazing gadget or phone app. People have achieved substantial business success in every conceivable area. The one thing they have in common was that someone had the courage to begin.