By: Hannah Scott
In a survey conducted by CNBC and SurveyMonkey, 65% of US adults said they live paycheck to paycheck. Due to segmented financial decisions, this condition applies to middle-class US citizens and wealthy people with a preventable 6-figure tax bill.
The heavily segmented financial decisions created a problem of tax liabilities. Although made as a wealth accumulation strategy, every financial decision would add more tax liabilities, leaving the high-earners dry and forcing them to live paycheck to paycheck.
Strategy-Driven Wealth Accumulation
Most high-earners still put tax on the backburner, meaning they don’t factor in tax before making any financial decisions. This costs them a lot of money, and unless they prioritize every financial decision with tax planning as a priority, this may be a perpetual problem.
To properly plan for tax, every financial instrument should not be segmented and treated individually. Incorporating them into one financial strategy for wealth accumulation can start the journey to a financially secure future.
Thorough Financial Examination
What comes next is the examination of each individual’s financial situation. If loopholes increase tax liabilities, these specific areas must be addressed. If there are ways to redirect the fund to minimize unnecessary expenses, the individual should start from that. This move must always adhere to the numbers so the strategies can remain predictive and reliable.
Wealth accumulation begins with holistic tax planning; this is not only ethical, it’s profitable and sustainable.
The Union Team Approach to Financial Planning
A comprehensive financial strategy often benefits from what’s known as a “union team approach.” This method involves a collaborative effort from multi-licensed experts in various financial disciplines. By pooling the insights and expertise from professionals in tax planning, legal solutions, investment, and financial management, a more holistic and tailored plan can be crafted. This team-based approach aims for all aspects of a client’s financial life to be integrated and optimized for maximum benefit.
Proactive Tax Planning for Wealth Building
Proactive tax planning is the antidote to perpetual tax liabilities. To do proactive tax planning, financial advisors and their clients must factor in legal, moral, ethical, and profitability factors. By approaching every financial decision with the aforementioned values upfront, a holistic wealth-building plan can be achieved.
Some of the most known and chosen financial instruments for high-earners are real estate investment, lending, stock market, and estate planning. These instruments also need to be tackled from a tax mitigation perspective, where the calculation of the possible tax implications of each financial decision is considered in complete transparency.
Next, holistic wealth building also needs to consider what the earners want and where they are at financially. Only then can a strategy be crafted based on the real-time numbers that the earners are at. Basing things on the available data creates a predictive and comprehensive wealth-building strategy.
What proactive tax planning does is redirect funds that come from minimizing unnecessary expenses that come with tax liabilities. After that, the financial advisor would ideally move into actions that allow the earners to minimize their tax obligations while maximizing their financial position. However, financial advisors can never get too comfortable and have to run the numbers more than once to ensure the money the earners can save from tax planning is accurate.
From Paycheck to Lasting Wealth
With tax obligations kept at bay, high-income earners can easily focus on what matters: building their financial legacy. The approach of wealth planning, beginning with tax planning, is never a mainstream idea. Some might even advise against it and only put tax as an afterthought.
Leaving the paycheck-to-paycheck life means adopting tax-proactive mentalities. A tax-proactive practice will have to include a routine checkup for tax planning and strategizing to reduce taxes. Bringing in experts in each financial instrument can help individuals achieve the ideal tax-planning outcome.
Bearing this mentality, tax planning should be an anchor in every financial decision. By building it as a financial habit, living paycheck-to-paycheck should no longer be the norm. High-earners can focus on their journey to lasting wealth.
Author’s Bio
Shawn Davenport is a strategic wealth advisor who founded Genwealth360 to help clients accumulate wealth through holistic tax and financial planning. He is an innovative wealth savant who develops customized plans that impact his clients’ financial positions. Shawn is currently writing two books, The Physicians Wealth Code and The New Tax Paradigm.
Disclaimer: This content is for informational purposes only and is not intended as financial advice, nor does it replace professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.
Published by: Khy Talara
