Young People and Taxes!
Regardless of what job or career you may have during your life and what country you may live in—the U.S. or abroad—you're going to be paying taxes. In most situations, you may already be paying taxes.
Nearly every day of your life you will need to deal with taxes. Not just when you work a job, but also when you purchase things—ever heard of sales tax?
Here's a scary thing about taxes: If you don't understand how they work, you will probably throw away thousands of your hard earned dollars in unneeded tax payments.
So exactly what is a "tax"? A tax is money you're required to pay to a local, state, or national government. The government then uses that money to pay for things such as:
- Public roads, bridges and other types of infrastructure.
- Public schools, community colleges and trade schools.
- Hospitals, prisons, police and fire departments.
- State parks, health, drug and safety regulations and the agencies that enforce them.
Taxes and you: In order to be smart with your money, you'll need to know now how taxes will impact you—and how you can pay the least tax required. You'll need to know how you can make taxes "work" for you...
Did you know that paying taxes can actually improve your saving skills?
When I started FoolProof, I knew nothing about taxes. And I sure didn't know how to save money!
I did know that I was going to owe taxes on my company's earnings at the end of the fiscal year. In order to pay those taxes, I decided to set aside a percentage of my earnings every month, and store it in a savings account.
First, I researched taxes and roughly figured out how much money I would need to set aside every month to pay them. Then, I added 5% extra every month, just to be on the safe side and to create a buffer. I budgeted very conservatively.
I set aside money every month, and didn't touch it...ever. Not even during those months I was nearly broke. I figured the money was not actually mine to keep.
At the end of the year, this buffer added up to about $3,500! I paid my due taxes, earned a little money to live off of while working on my own company, and even managed to save a little cash.
Now, let's learn about taxes:
Start by working through our online and interactive FoolProof Solo module on taxes. It will show you all the ins and outs of taxes. It will also show you in an easy and interactive way how to compute your taxes and how you can plan to pay them.
Like it or not, taxes are part of your life. Start right now by learning how to be a responsible and smart tax payer.
See you next time.