How much money are you making? This is a question that I have been asked a lot. Not only is it a question people ask themselves, but I’ve been asked by friends, colleagues, and even strangers. I’m not going to go into the details of the math behind the question because it’s a bit involved, but I will give you my take on the subject.
It all comes down to 1) how much money do you have 2) how much money you are spending on things that don’t count as income.
I have been told by two different people that they are both millionaires. As I have worked my way through the world of finance I have seen that it is a complex thing. There are multiple metrics to consider such as taxable income, net worth, tax rate, depreciation, and tax shelters. I have also spent a lot of time researching the various “inflation indexes” that exist to try and figure out how much money is really being made in the world of finance.
One of the first things to look at when you are starting to realize you are actually going to end up being a millionaire is your taxable income. Taxes are a huge part of the equation because they affect all other ways of determining how much you are actually making. If you have a lot of money, you can often look at depreciation and depreciation deductions, and see that you have a lot more money to begin with.
While those depreciation deductions are useful for people trying to figure out how much they are actually making, the real question is how much of that money is actually being used in the world. The depreciation deductions are really only useful to the wealthy because they are not deductible and they are not taken into account in taxable income. If you take the depreciation deductions and your deductions are more than your taxes, then you are a millionaire.
The most important thing to remember in order to make a profit is that you need to keep your expenses taxed. Most of the time you can’t manage to make an ordinary house or apartment investment at all, but when you have an income of $30,000 a year, you should have this amount of money to spend. It’s quite possible you could make an extraordinary amount of money today.
In short, an income of 30,000 is quite a lot of money, so most people need to consider taking on a few more expenses. Taxes can be a big one, but they are definitely not the only consideration. Spending is also a big part of it. So are the expenses you need to take out and the tax deductions you need to make.
Most people are familiar with the term “tax bracket.” Essentially it is a tax bracket that applies to a given income amount. For instance if you are making $30,000 a year, you would be in the 15% bracket. If you are making $40,000 a year you would be in the 25% bracket. If you are making $50,000 a year you would be in the 35% bracket.
To illustrate your point, here are the tax brackets for your personal income in 2017, when you pay federal income tax at the 15%, 25%, and 35% rates.