It’s time to dust off the files and recycle an old column. In fact, this column is based on the very first one I wrote when I was hired as the Executive Director in the summer of 2001. At that time President Bush had recently authorized tax relief legislation and many families were about to receive checks for up to $600.
We’ve come full circle, as Congress has just passed, and the President has just signed, the economic stimulus package” that will result in checks for up to $600 per person, $1,200 per couple, and an additional $300 per child. And as I’m writing this, Governor Blagojevich has just proposed issuing an additional $300 tax rebate per child to qualifying Illinois families. What are we going to do with all of this money?
For many years I volunteered with the Junior Achievement organization by teaching “Project Business” to eighth grade students at Edison Junior High School. The goal of the program was to educate young adults about real-world economics and business. I remember the “cycle of money” was one of the concepts I really enjoyed sharing with the students.
Stated simply, the cycle of money is the idea that money flows from consumers to businesses and then back to consumers. How? Consumers use their paychecks to buy goods and services from businesses and then the businesses use that same money to buy goods and services from other businesses and to pay employee wages. Eventually the money ends up completing the cycle in the hands of the consumer, generally as a paycheck. And then the cycle begins again.
In Project Business we played a game with the students to demonstrate this concept. The students were each assigned different roles (consumer/employee, business, utility, service, retail, etc.) and each time money passed through their hands they wrote their name on it. At the end of the game the students were amazed at how many names were written on each piece of money, and how they ended up with money that had their name on it several times.
The obvious goal of the economic stimulus package is to jump-start the economy. If you are a recipient of a tax rebate check, you can do just that by investing your rebate in the cycle of money. How? Here’s a list of ideas in no particular order:
1. Invest your rebate in a financial institution. Yes, that is part of the cycle of money, as the bank will take your money and loan it to businesses looking to expand and grow, creating new jobs and new products or services.
2. Invest your rebate in a charity or your church. Like banks, these organizations are also a part of the cycle of money, as they will use your donation to buy goods and services.
3. Plan a Pekin vacation. What do you do when you go on vacation? You stay at a hotel, swim, shop, fish, golf, take in the sites, and dine out for every meal. You can do all that without ever leaving town. Spend the night at a local hotel, eat all of your meals at local restaurants, play the local Pekin golf courses, take the family swimming at Dragonland, go horse-back riding, shop at the local Pekin stores, etc.
4. Remodel your house or business. Everyone has a list of projects they’ll do when they have the money…a fresh coat of paint, landscape, replace the furnace, replace the carpeting, buy new furniture, etc.
5. The rebate check might be perfect timing if you need to buy your children their back to school supplies and clothes.
6. Use your rebate check as part of a down payment for a new car, motorcycle, recreational vehicle, or home.
7. Visit your doctor/dentist/eye care professional and take care of those things you’ve been putting off.
8. Get your vehicle cleaned, tuned-up, buy new tires, etc.
9. Get your Christmas shopping done really early.
The list could go on and on, but you get the idea. I strongly encourage you to do your part to help jump start the economy—invest your tax rebate in the cycle of money with local Pekin businesses. In that way, we will all benefit as the cycle of money continues to flow locally between consumers and businesses.
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