How do you save money when making $100,000+ a year?
As in, how do you save more of this money from being eaten by taxes? Usually people talk about investments, but I am not invested in anything at this time. (One point I do know is that everything you earn is taxed. Income is taxed. So the money you would invest is already taxed...once it is invested and starts to accumulate income, based on it's interest %, you are taxed on that again.... yay taxes). This point is besides the point, but just illustrating. In short, just looking ahead so that when I do earn more income, how do I be smart and save as much money as possible from taxes? There has to be a cross-over between saving money from taxes (your left over income), what you invest in bonds, etc, and the money you put into your retirement... how do you figure out the best method? EDIT: Oh and I'm single.
Public Comments
- The first thing you need to do is open a 401k or a Roth IRA. They are pre taxed, so it will lower your tax liability. Also, if you reach the 100k point, you need to buy a house. Interest is tax deductible.
- Ignore the part of the first answer where it says Roth IRAs are "pre-tax"....they are not. Roth IRAs grow tax free but do nothing to help your current tax liability. Max out your 401k if you have one available. You can make contributions on a pre-tax basis there. So if you earn $100,000 and put $15,000 in a 401k then your taxable income is now $85,000.
