Do you ever wonder where all of your money goes? Or why your employer stated when you got your job that you would be making “$60,000 per year” (awesome!) but instead of your monthly paycheck being $60,000 divided by 12 months = $5000 per month, it is much, much less, sometimes only HALF of that: $2500 per month? WTF? What is THAT about, anyway? WHAT HAPPENED TO YOUR MONEY???
Let’s see if we can answer that with a multiple choice question:
a. The United States Government Stole It!
b. You have absolutely no idea
c. All of the above
Well, just like in school, if you answered “c” you are correct! (Remember on those standardized tests, when in doubt, the answer is always “c”! Or a., c., d., c…..Rock ‘n Roll, as they used to say!)
Anyway, today we are going to discuss answer “a”, and learn how the United States Government is legally “stealing” your money.
If you are anything but the absolute poorest of poor people (which unfortunately today in America is almost 50% of the population, but that is the subject for another post :() you pay taxes. A LOT of taxes. Here is just a brief sampling:
Sadly, this list goes on and on! And the government not only taxes individuals as listed above, but say you as an individual also want to start a business (you know, provide something of value to the world, possibly create some economy-growing jobs while you’re at it, etc.), well yep, you guessed it, that ENTITY is ALSO taxed with its own list:
Now, please take note: I am NOT saying that you shouldn’t pay your taxes– on the contrary, you definitely SHOULD pay your taxes! And promptly! (Otherwise you have to pay penalties, too!) But it is important to become AWARE of this ginormous (<– bigger than “enormous”!) expense! If you are aware, you can then choose to minimize the burden and the impact that taxes have upon your life.
When studying Kung Fu or any type of self-defense, one of the most important skills to cultivate is awareness. You must always be aware of your environment, your attacker, your own condition, and more, in order to be the most effective in battle. It is no different in Kung Fu Finance, and therefore we are going to discuss the power of awareness quite a bit.
Did you know that there are actually three levels of awareness?
By changing “awareness AFTER the fact” into “awareness BEFORE the fact”, you TAKE BACK YOUR POWER and make better, more informed decisions. This is a subtle, but POWERFUL distinction.
Are you still with me? Then it’s time for some action!
THAT is what we are talking about… MUCH of your money is taken from you via taxes before YOU EVER EVEN SEE IT!
Now there are a million and one other deductions from your paycheck in addition to taxes that are subtracted before you actually get your “take home” or “Net” pay, such as health insurance deductions, 401(k) deductions, ESPP deductions, etc., but for now we are just focusing on the incredible effect of TAXES on your life (baby steps, grasshopper!).
Congratulations for making it this far! I hope this has opened your eyes as to the single largest expense you have as an American citizen. As you slowly expand your awareness of taxes, you will be able to reap many financial benefits, including:
As you progress from unawareness to being aware of things before the fact (before it’s too late!), you will see your money really begin to grow. And THAT is fun!
Let me know what you think about taxes in the comments below!
To your investing success,
— Kung Fu Girl
“There are three levels of skill in ‘pushing hands’: non-awareness, awareness after the fact, and awareness before the fact.” — Wu Gongzao, second son of Wu Jianquan, quoted in T’ai Chi The International Magazine of T’ai Chi Ch’uan Vol.19 No.2, April 1995.http://www.bookrags.com/quotes/Tai_chi_chuan