Do you ever wonder why your money doesn’t go as far as you think it should? Most people do. So where does it all go? Why is there so much month at the end of the money? There are many things that erode your money on a daily basis. We’re going to discuss one of the ten most common factors that leave you with less money than you would like. I think you’ll be quite familiar with it.
Eroding Factor #1: Taxes
Taxes help our government to run, therefore, there is nothing we can do to avoid paying tax because we know that we will always have a government. When tax law first began the top tax bracket was only 7%. Today, it sits at 35%, and its likely that will go up in the years to come. Aside from paying federal taxes, we pay state, city, and even local taxes. Believe it or not, it doesn’t stop there. The everyday goods that we purchase we pay a tax on, also known as sales tax. Do you own a home or car? You guessed it. Taxed. Every year. Ever heard of Social Security? You pay tax on that, too. After taxes, you have had about half of your income eroded away.
So let’s do a quick review. We pay taxes on money that is coming in to us, and we pay tax on the money that is leaving us to purchase goods. Where does it stop? Not there.
Benjamin Franklin once said,
“In this world nothing can be said to be certain, except death and taxes.”
Mr. Franklin is quite smart. In fact, when you die both of them are combined. Who would have thought? You don’t even have to receive or dish money out to pay taxes! When you die, something called an estate tax is created. Estate taxes are taxes imposed by federal or state government on property transferred from the deceased to the living.
Taxes erode our wealth faster than any other of the eroding factors, but is certainly not all that affects our bottom line. Stay tuned for the rest of the nine wealth eroding factors.