Many Americans think housing is their biggest expense, but a hidden cost could be draining even more from your budget.
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Here’s the expense Grant Cardone, a private equity fund manager and real estate investor, said you shouldn’t forget about — and what you can do to lower it.
Why Taxes Might Be Your No. 1 Expense
Neglecting to take taxes into consideration can skew your financial planning priorities — yet many Americans don’t think of this cost as part of their budget.
“Most Americans don’t even consider taxes an expense when it’s the No. 1 expense,” Cardone told GOBankingRates while discussing the 10X Wealth Plan, a personalized financial coaching program.
“They know what their rent is,” he continued. “They’re complaining about their rent, the cost of food — but that’s not the thing [that’s costing them the most]. So we need awareness about exactly where their money is going.”
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How To Lower Your Tax Burden and Build Wealth
On average, Americans pay 29.2% of their income to federal, state and local taxes, according to the Institute on Taxation and Economic Policy — but many end up paying even more than that.
“You’re paying somewhere between 25% and 40% with state and federal taxes,” Cardone said. “To create a wealth plan, the goal would be, ‘How do I reduce my taxes?’ Because that is my largest expense.”
That’s why it’s so important to invest in assets that not only grow your income but reduce your tax burden as well.
“If I buy stocks, I don’t get any write-offs,” Cardone said. “If I buy bitcoin, I don’t get a write-off. But if I bought real estate that produced income, I would get a write-off for that tax bill.”
Understanding your true expenses — especially taxes — is key to building lasting wealth. As Cardone put it, “This is what all the wealthy people do. The wealthy people are not paying taxes.”
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This article originally appeared on GOBankingRates.com: The No. 1 Expense Most Americans Overlook, According to Grant Cardone
[SRC] https://finance.yahoo.com/news/no-1-expense-most-americans-145606989.html
