Personal Finance
There are different levels of finance, some are as follows:
Financial Dependance-you depend on an employer for income, this can be a minimum wage job or CEO of a company or a famous athlete or movie star; if you rely on someone else for your livelihood then you fall into this category. The only thing below this level would be if your income doesn't support your lifestyle, again this can apply to a minimum wage employee whose full time job won't cover rent or a movie star who spends more than they make. Below is a clip humorously showing the perils of relying on employers for income.
Financial Indpendance- Here, you control enough of your income that you could cover your normal lifestyle without outside employment. This could be a part time business, side gig, etc. It's not necessarily luxury, but it covers all bills, basic expenses like food and gasoline. This could be a rental property that you manage.
Financial Freedom-This is similar to Independance, the key difference is it's not from labor; it's your money working for you. This could be rental property if you make a profit after hiring a property manager or dividends from a stock you own. Once you have this, your time is your own; you may choose to continue working in the job you've had or you may want to work on a new project. If you have financial freedom, you may work towards wealth; as your necessities are covered by your assets and all earnings are available to put towards your goals (whether thats purely enjoyment or growing wealth.)
Tax benefits-Retirement Savings Contributions Credit (Savers Credit) if you earn less than $36,500 you can get a benefit for even contributing to a Roth IRA. If you earn $21k and contribute $7k to a Roth IRA, you'll save about $650 in taxes and owe nothing on your federal return; you may even get an EITC and get a refund! At the higher level it's only 10% of the investment, but that's still $200 off what you contribute; a bit less than 1/4 of the taxes on that money.
For higher earnings, the higher tax rates might see great savings in 401k contributions which are tax deferred (rather than paying taxes now on money invested inside a Roth IRA) and combined with employer contributions that are also tax free can be a massive windfall. Contributing $23,000 with an income of $700k would yield savings of $8500, if making $70k the tax savings are a modest (but significant) $3585. If employer matching is available (usually 3-6% of income) it gets more dramatic.
To perform a Backdoor Roth IRA, start by making a nondeductible contribution to a Traditional IRA, since high-income earners are often ineligible for direct Roth IRA contributions. Next, convert the funds from the Traditional IRA to a Roth IRA- ideally soon after the contribution to minimize any taxable gains. Ensure you have no other pre-tax IRA balances (like Traditional, SEP, or SIMPLE IRAs), as the pro-rata rule will otherwise cause a portion of the conversion to be taxable. After the conversion, file IRS Form 8606 to properly document the nondeductible contribution and conversion. This method allows high earners to legally fund a Roth IRA despite income restrictions.
For the college student, you can get PELL grants and bright futures college scholarships; which can cover the entire cost of enrollment in a public college/university in many cases. You can also get the AOTC tax credit that can put up to $1000 cash in your pocket.
Someone earning $44,000 could contribute $23,000 to a 401k and $7k to a Roth IRA and owe almost no student loan payments (income based repayment, as of July 2025; it would likely be $10/mo. Basically 1-10% in $10k AGI increments from 10k at 1% to 100k at 10%) and no Federal Income taxes (though eventually they'd pay on money they take out of the 401k.) This can get even better if their company matches contributions. They might be able to earn even more if they can afford a house as mortgage interest is deductible, as is depreciation; as well as up to $2500 in student loan interest. They could also have an employer match of $11,625, you'd have $3557 taken out of your base salary and the employer would pay the same amount (both toward social security and medicare) and most money would go toward retirement planning with about $10,300 left; but this just illustrates things that can be done to lead to tax savings. I improved on this structure on the taxes page.
If self employed, you can have an SEP IRA or Solo 401k; the total combined contribution limit is $69k and is capped at 20-25% of your income (20% after tax, 25% before self employment tax; ask an accountant to help you that's just a guideline.)
real estate tax benefit: If you lived for 2 years in a house and sell it, up to $250k in profit can be tax free as long as it was your primary residence for 2 of the last 5 years and it resets when you sell. The cheaper your input, the more profit and better shot at $250k tax free you get. Beyond that, there's the 1031 tax deferred exchange; but you won't have that in cash unless you can refinance it and pull out 80% of your equity. My idea, let's say a group of Amish people (really, anyone who can work as a team to build houses fast) buy a lot just outside of a city which is zoned allowing subdivision (turning 1 lot into many normal size lots) they could build the houses as a team and the only labor cost would be electric/plumbing, their cost would be materials, land, permits, taxes and you have to make sure the utilities companies will bring water/sewage/electricity to them if not already there (sometimes an agreed upon amount structured over X years.) In 2 years, this team all has $250k in tax free gains each and can build some serious wealth. Imagine if it were a team of 100 people, sure they'd have to stagger the sales (same rate as which they built) but they could even refer give a long term lease and sell to a corporate landlord who wants to trade cash for income. Of course, all you have to do is find a property that will be worth $250k in 2 years and buy it; you could theoretically make $125k/yr doing that alone (double that if married.)
Wyoming trusts video (don't text and drive, that was a poor example used in the video; just disclaiming.)
Banks and credit unions offer various types of accounts tailored to different needs. The most common are checking accounts, used for daily transactions; savings accounts, designed for storing money and earning interest; money market accounts, which offer higher interest rates with limited withdrawals; and certificates of deposit (CDs), which lock in funds for a fixed period at a fixed rate. When opening an account, customers typically provide identification, proof of address, and a Social Security number. Managing accounts involves tracking transactions, avoiding overdraft fees, and ensuring secure access through online or mobile platforms. Evaluating a bank’s service quality includes looking at fees, customer service responsiveness, ATM access, digital tools, and reputation with regulators and review platforms.
Balancing a checkbook involves comparing your personal transaction records against your bank statement to ensure accuracy and prevent overdrafts. This process requires recording all transactions—deposits, withdrawals, checks, and fees—as they occur. At month’s end, or when you receive a statement, you reconcile it by checking off recorded transactions that appear on the statement and adjusting for any discrepancies, such as bank fees or interest earned. The goal is to match your ending balance with the bank’s reported balance, accounting for any pending transactions. This practice fosters financial awareness and helps detect errors or fraudulent activity early.
Effective money management includes budgeting, smart spending, and responsible credit use. A solid budget allocates income toward necessities, savings, debt repayment, and discretionary spending. Credit should be used thoughtfully—paying balances in full, avoiding high-interest debt, and understanding credit scores. Your credit score is influenced by payment history, credit utilization, length of credit history, credit mix, and new inquiries. High scores improve loan access and rates. Debt management involves minimizing interest costs and prioritizing high-interest debts. Retail and credit card debt, if mismanaged, can spiral due to compound interest and late fees, making consistent payments and restraint essential.
Loan applications typically require personal information, employment and income details, debt obligations, and consent to a credit check. Lenders use this data to evaluate your creditworthiness, considering your credit score, income-to-debt ratio, and repayment history. Whether applying for a personal loan, car loan, student loan, or mortgage, applicants should ensure accuracy and honesty, as discrepancies can lead to rejection. Supporting documents like pay stubs, tax returns, and bank statements may be needed. Understanding the loan’s terms, including APR, repayment schedule, and fees, is crucial before signing any agreement.
Inheriting money or property can be life-changing, but it comes with financial, legal, and tax implications. Beneficiaries may need to navigate probate court if the estate lacks a trust. Some inheritances, like retirement accounts, may require minimum distributions or have tax consequences. While most direct inheritances are not subject to federal income tax, estate taxes or state inheritance taxes may apply depending on the size and location of the estate. It’s advisable to consult financial and legal professionals to determine how to manage, invest, or preserve inherited assets wisely, especially if they impact means-tested benefits or financial aid eligibility.
Personal insurance policies protect against financial loss due to unforeseen events. Common types include health, auto, life, renters, homeowners, and disability insurance. Each has terms defining coverage limits, premiums, deductibles, and exclusions. For example, health insurance may include co-pays, while auto insurance has liability and collision components. Choosing the right policies requires assessing risks, comparing providers, and understanding policy language. Life insurance helps replace income for dependents, while disability coverage provides income during illness. Regularly reviewing policies ensures that coverage keeps pace with life changes, such as marriage, homeownership, or job shifts.
Federal income taxes are calculated based on your taxable income, which is your gross income minus deductions and exemptions. The U.S. uses a progressive tax system with brackets ranging from 10% to 37%. Taxpayers can take the standard deduction or itemize expenses like mortgage interest and medical costs. Credits, such as the Earned Income Tax Credit or Child Tax Credit, reduce the amount owed. Employers typically withhold taxes from paychecks, and self-employed individuals pay estimated quarterly taxes. Filing involves using IRS forms like the 1040 and may result in a refund or additional tax liability depending on withholdings and credits.
Local tax assessments primarily refer to property taxes, which fund public services like schools, emergency services, and infrastructure. Local governments assess the market value of real estate periodically to determine tax liability. This assessment can be appealed if a property owner believes it is overvalued. Rates are usually expressed as millage rates (dollars per $1,000 of assessed value). In some areas, special assessments may apply for improvements like sidewalks or drainage. Renters indirectly pay these taxes through rent. Understanding local tax obligations is crucial when budgeting for housing or evaluating real estate investments.
Interest can be calculated using different methods, affecting how much you earn or owe. Simple interest is computed only on the principal amount, using the formula I = PRT (Interest = Principal Ă— Rate Ă— Time). Compound interest adds accrued interest to the principal before calculating future interest, leading to exponential growth. The frequency of compounding (annually, quarterly, monthly, or daily) significantly impacts results. APR (Annual Percentage Rate) includes fees, providing a truer cost of borrowing, while APY (Annual Percentage Yield) reflects compounded interest for savings. Understanding these mechanisms helps when evaluating loans, credit cards, or investments.
A simple contract is a legally binding agreement between two or more parties, enforceable by law, and doesn't require a formal format or notarization. Essential elements include offer, acceptance, consideration (something of value), mutual consent, and legal purpose. Simple contracts can be written or verbal, though written ones provide clearer evidence. Examples include service agreements, sales of goods, or employment terms. Breach of contract can lead to legal remedies such as damages or specific performance. Reading the fine print and understanding terms—like obligations, timelines, and penalties—is vital before entering into any agreement.
If you find an error on a billing statement—such as unauthorized charges, duplicate entries, or incorrect amounts—you have the right to dispute it under the Fair Credit Billing Act (FCBA). Begin by contacting the creditor promptly, usually within 60 days of the statement date, and follow up in writing with documentation. During investigation, the creditor cannot charge interest or report the amount as delinquent. Consumers should monitor accounts regularly, keep records of disputes, and escalate unresolved issues to regulatory bodies like the Consumer Financial Protection Bureau (CFPB) or credit bureaus if needed.
Savings and investment options range from low-risk, low-return to high-risk, potentially high-reward vehicles. Traditional savings accounts offer liquidity and safety, while CDs lock in money at fixed rates. Investments include stocks (ownership in companies), bonds (loans to entities), mutual funds (pooled investments), ETFs (exchange-traded funds), and retirement accounts like IRAs and 401(k)s. Risk tolerance, time horizon, and financial goals should guide asset allocation. Diversification reduces risk by spreading investments across sectors. Regular contributions, compounding, and tax-advantaged growth play key roles in building long-term wealth through investing.
Financial activity is regulated by a framework of state and federal laws to protect consumers and ensure market integrity. At the federal level, agencies like the SEC, FDIC, and CFPB enforce laws such as the Truth in Lending Act, Fair Credit Reporting Act, and Dodd-Frank Act. These laws govern disclosures, lending practices, consumer rights, and financial institution conduct. States may impose additional protections, especially in lending and debt collection. Financial literacy includes understanding your rights, recognizing predatory practices, and knowing how to file complaints or seek redress through courts or regulatory agencies.