If you could boil down one way of seeing the difference between the rich and the not-so-rich, you could do it by seeing their tax return. There are a ton of other ways, but this one is so simple and yet it clearly defines the people that watch their money closely to make sure they are spending and saving in the correct areas and the ones that don’t. The ones that do pay attention to where their money goes tend to be more rich.
When I filed my first year in taxes I was so excited to get that return back. It was like Christmas came late! I couldn’t wait to take this new found money and spend it on a new surf board. It took me a few years to realize that this is not how the rich see taxes or tax returns.
Let’s break this down simply
You owe the government money every year for living in this country. We don’t need to get into where it all goes, because if we go there, then you’ll get all mad and stop reading. If you are employed, you pay your income taxes every month and/or on every paycheck. If you own your own company it is a little different, but let’s stick to just your income taxes for now.
Either way they are going to take money out of your paycheck that is estimated to what you will owe at the end of the year. The government wants to estimate it higher so they have to pay you back later. Why?
Simple. They want to use your money for free (paying you no interest) all year and make money in the process. Then after a year of holding it, they give it back to you. It was your money the whole time! If you haven’t come to this realization until now, I hope you aren’t near any glass windows – be careful what you hit.
Woohoo $20 in my Jeans!
Yes, getting a tax return is like finding $20 in the pocket of some old jeans you haven’t worn in a while. It is like new found funds you didn’t know you had. It’s great until you think about it too long. This is the same way with your taxes. If you want to keep feeling like you won the lottery come every April, don’t think about your taxes or ways to bring efficiency to them. Just live in a life of ignorance and grab that $20 every year from those old Jeans you can’t fit into anyways.
If you want to make sure you don’t keep loaning your money to the government every year, start to find ways to lower your tax bill. In some cases you won’t be able to lower that return, but you can increase it.
Small Things Over Time
Success and wealth are not get rich quick schemes. Success is a grind. Wealth does not build overnight. Jim Rohn says that success is simple disciplines practiced every day and failure is a few small errors in judgement made every day. If you want to keep finding the $20 every year, go for it. Be lazy, don’t pay attention to where your money is going. If you want to make your money work for you, or even use the governments money during the year and pay them their due at the end, now you are talking about those small decisions that lead to success.