4 Financial Truths for First Jobs

After a lifetime of hard work and study, you’ve done it. You’ve completed your high school or college education and are heading out into the world. It’s a momentous achievement, and you should feel very proud.

Unfortunately, there are a few things I’m afraid you may not have learned. You see, the education system typically does a lousy job of teaching people how to manage their finances and an even worse job equipping them to make wise decisions about reducing taxes and building their wealth. You deserve to keep as much of your hard-earned money as possible.

Before you get your first paycheck (and notice all of the taxes being withheld), there are four ideas I’d like to share as you start your career. These are ideas formed in my experience as a CPA and show up in some way in the pages of a new book I authored.

1. There is power in understanding the truth about taxes.

Most people’s understanding of the tax law is all wrong. They view it as a painful litany of ways the government is out to get you — hidden traps for snagging more of your paycheck.

In fact, the tax law is pretty simple. It establishes a framework for what kind of money is taxed and at what rates. And, contrary to popular opinion, the framework is entirely fair. Any two people who do precisely the same thing, in the exact same way, will pay the same amount of tax.

The tax law only gets complex when it comes to all of the ways you can not pay taxes. The government wants tax revenue, but it also wants businesses and private citizens to do things that help the larger society, such as:

  • Create jobs
  • Build housing
  • Invest in new energy sources
  • Develop new technology
  • And much more

The government offers tax incentives to accomplish those goals — giving up some tax revenue in exchange for businesses and people taking on these tasks. These incentives make up the bulk of the tax law — making it the ultimate guidebook on how to reduce your taxes.

2. Everyone should give serious thought to starting a business.

The government knows small businesses are the engine of the economy, so it offers plenty of tax incentives to encourage business investment. That means that as a business owner, you’re likely to be able to keep more of the money you earn. When you keep more of what you earn, you tend to build wealth much faster.

You don’t have to go all-in as an entrepreneur right away. But as you begin your career, look for opportunities to create a small business. You might start a side-hustle alongside your day job. You could invest in real estate. Or, you could buy an established business that already has a team to run the operations.

Having your own business is a great way to create an additional income stream. On the tax side, it opens up:

  • Tax credits, such as the Employee Retention Tax Credit and Work Opportunity Tax Credit
  • Tax deductions, such as for your home office, business travel, insurance and more
  • Lower tax rates on investment income than wage income

Of course, owning a business isn’t the only type of investment governments favor. Take some time to learn about tax-effective investing strategies that work around the world and create a win-win situation for both investors and for society. Understanding both how and why these strategies work will help you as you design your financial future.

3. You need to put a great team around you.

The DIY approach to managing money is trendy right now, but I implore you not to base your wealth and tax strategy solely on the advice you get from someone standing in front of a fancy car on YouTube or TikTok.

When there’s something wrong with your car, you visit a mechanic. When you have a toothache, you see a dentist. When you need wealth or tax advice, turn to an expert.

Look for a CPA and other financial professionals who use a proven strategy for delivering results. You don’t need to find the smartest advisor; you want to work with someone who uses the best system to reliably produce the best results.

4. While you can focus on finances, don’t lose sight of your passion.

Your wealth and tax strategies are there for a reason — to help you achieve the life you desire. Don’t lose track of that goal.

This is one of the most exciting times in all of human history to be taking the next step in your career. Never before have individuals had such ready access to knowledge and technology at their fingertips. The possibilities are endless.

As you get started, stay open-minded and curious. Don’t be afraid to think differently and try new things. You’ll achieve great things.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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