Key Takeaways
- While taxes may be certain in life, there are tax advantage strategies that can help lessen the toll taxes can take on your money.
- There are three tax advantage benefits to look for when we talk about tax planning: tax deductible, tax deferred, and tax free.
- Yearly tax planning can save you a lot of money and help build your wealth more quickly over the years.
“In this world nothing can be said to be certain, except death and taxes.” I’m sure you have heard that quote attributed to Benjamin Franklin, but I’m going to have to disagree slightly and say that we can control taxes to a degree.
When you are building wealth and investing money you start with a gross rate of return. Supposedly, there are two things we can’t do anything about, and that’s inflation and taxes. I beg to differ on taxes. There are three areas where you can take advantage of taxes: tax deductible, tax deferred, and tax free.
I don’t care if you are wealthy or you are just starting off in life, everybody can do tax planning because it affects all of us and it is available to all of us. If you are going to grow your wealth successfully over time, it’s imperative to do tax planning every year to see where you could take advantage of one or more of these tax advantage benefits. By doing yearly tax planning, you will net yourself more money. That money can be invested and grow more rapidly, so you’re going to build your wealth more quickly, or you might have to pay down debt, and either way, that will increase your net worth.
Building your wealth is about making good, smart decisions, and tax planning on a yearly basis is one of those decisions that can make a huge difference over the years in accumulating wealth.
That’s really what it’s all about, just making good, consistent decisions.
Until next time, enjoy!
Gary