Understanding IRS Humor
Is it possible that when you do the right thing with your financial life the IRS actually thinks you are cheating on your taxes? Could your financial efficiency raise a red flag for the IRS? Unfortunately it is possible because it’s such a rare occurrence.
Why IRS Red Flag
The best way to get ahead financially is to live on less than you earn. Few people actually accomplish that task so it sets up a red flares at the IRS.
Accountants, tax planners, financial advisors and even the Internal Revenue Service are often amazed at how sloppy people are with their money. They can tell you everything there is to know about unimportant events or statistics but are completely oblivious when it comes to how much they spend compared to how much they earn.
How To Save Money
Financial know-how is quite simple but some people allow money, investments, retirement planning, stock markets and spending habits to paralyze them into “checking-out”. They do not know how to save money, how much to save or how to select an investment so they don’t do anything. Sometimes they do the exact opposite of financial common sense.
If you want to save money you need to stay objective, don’t “check-out”. Follow your common sense; which should tell you that you cannot spend more than you make. It’s not what you keep that counts, it’s what you make.
Stop The Bleeding
The most basic but sometimes most difficult way to save money is to just stop spending. Easier said than done especially if you have developed sloppy spending habits.
Can We Say Budget?
Do not allow your prior financial habits to stop you from developing new ones. If you really want to reverse course on your spending and saving habits you need to take that first step. Make a budget. Without a game plan how will you move forward effectively? You won’t. A budget is simply your financial game plan or your map. You need a map to navigate your way out of old habits into new ones.
Can We Say Goals?
Set your financial goals. Without goals you are like a rudderless boat just drifting along. Do you want to retire early, buy a 2nd home, buy your first home, raise a family? All of those financial goals will require you to save money. Oh sure you can use institutional money by getting loans but you cannot get loans for everything. For example if you want to retire someday you will need your own money to do that.
Keep The IRS Guessing
If you want the IRS to consider you a rarity polish up your financial habits. Live below your means so the next time they review your tax returns they laugh at you.