November 12, 2013
Kickstarting the Economy
When the economy is struggling, unemployment is rising and the housing market has all but ground to a halt, you can be forgiven for feeling powerless as a consumer.
However, it is individuals who keep the economy flowing, by spending and borrowing, saving and lending, and keeping money moving from place to place so that it can be spent again.
Each time money moves around, there’s the potential for a portion of it to be claimed by the government as tax–and while that’s not something most people relish, it’s an important part in keeping the national economy in the black.
So how can you keep money moving, without facing a large tax bill of your own?
When you sell unwanted stuff for cash you are truly living up to the label of ‘disposable income’, by deriving an income from items that you might otherwise have disposed of for free into your local landfill site.
You keep money moving – towards you, which is always a good thing – and you might also help out a cash-strapped individual elsewhere who buys your second-hand goods but could not afford the same items as new.
It’s unlikely that you’ll need to pay tax if you only make a small amount of money from selling goods online, but if it becomes your main source of income, make sure you know whether or not you need to declare your earnings.
The Spending Splurge
If you have money to spare, it’s worth spending some of it, as a suppressed retail economy can make for some excellent bargains online and on the high street.
Buy things that are going to be useful for a long time, or which you would probably have ended up buying anyway; don’t just spend for the sake of it.
However, by converting your cash into physical goods, you can begin to enjoy them as useful additions to your day-to-day life, at a time when savings accounts are unlikely to be earning much by way of interest.
Again, this keeps money moving, and releases that locked away in your savings account so it can be used elsewhere to restore a fragment of liquidity to the national economy.
Charitable donations are an excellent way of making sure that the money you put back into the economy goes where it is deserved, and does not simply line the pockets of yet another banker.
Donations allow charities to carry out good work, and as they spend your contributions, the money will filter through into lots of different and important supply chains.
Best of all, charitable donations can be offset against the tax you pay, so if you’re employed you should be able to Gift Aid your donation, while if you’re self-employed, you can often claim your contributions against the tax you pay at the end of the year.
These are just a few ideas, but there are plenty of ways to keep your personal finances aligned with the needs of the nation, without your life savings simply vanishing into the bottomless pockets of the tax man.