Finances has always been a personal topic and many of us don’t openly discuss it even amongst family and close friends. It’s like some taboo that we can’t discuss finances yet we can comfortably talk about everything else. If we never talk about it, how do we get to understanding it more? Do we have a fear of trying to understand finances and is that fear holding us back?
Up until I got married, I never took the time to understand finances including investing and taxes. I had the mentality that I work, I get a paycheck, taxes are withheld, 401K is deducted, put some into savings, and the rest I spent it. I didn’t budget; I didn’t monitor my spending; I didn’t know where my money was going.
Even with taxes, I didn’t understand all the taxes being withheld. I didn’t understand the tax laws and how it affected me. I used to go to a CPA to prepare my taxes because I just did not understand anything about taxes. Truthfully, it was the fear of getting in trouble with the IRS that made me not want to understand it.
When it comes to finances, there’s so many topic areas to learn and know such as budgeting, investing, spending, taxes, deductions, loans, credit score, retirement, brokerages, capital gains and losses, pensions, debits and credits, and more. With so many areas, no wonder it might be intimidating. Are you interested in learning about financing but just don’t know where to start or scared you might get it wrong?
There’s only one way to overcome your fear…take the first step. If you want to know about budgeting, start tracking your spending. If you want to learn about investing, open a brokerage account. If you want to learn about taxes, take the time, study, and possibly start doing your own taxes. One thing is for sure…if you don’t try you won’t learn.
When I first started doing my own taxes, it helped me to understand the tax laws, become aware of tax brackets, types of deductions, business expenses, etc. Now, there’s software and websites that can walk you through filing your taxes. I’m now comfortable with filing my own taxes, my parents taxes, and my in-law’s taxes.
Same thing for investing and retirement planning. I started to understand investing by taking that first step of opening my first brokerage account. I learned about dividends, capital gains and losses, and shorting. Without taking that first step I would never have understood these concepts.
For retirement planning, I started my 401K early then I opened a IRA and a Roth IRA. I would not have understood the concept of rollovers, contributions, employer matching, and knowing that there’s an income limit for contributing to a Roth IRA. 20 years ago, the push for pre-tax retirement was big with the 401K.
Now the trend is to push after-tax retirement such as the Roth IRA. I’m now looking into this concept because of the risk of paying higher taxes while you’re in retirement. This year I made the mistake of over investing in my Roth IRA not realizing I was not eligible to contribute. It was an honest mistake but one I couldn’t have found out without trying. Just because you don’t know about something shouldn’t make you scared or fearful from learning about it.
I like things to be simple and not complicated. But that’s not life and the world we live in. All of us have to understand how to handle money and finances. It’s a part of our lives and we need to have a familiarity of it and the one thing you can do is take the first step towards it. Don’t let the fear hold you back. If you are interested in following my journey, email subscribe to get alerts of latest posts or follow me on Facebook, Instagram, and Pinterest.
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