On today’s episode of The His & Her Money Show, Carter Cofield is a licensed CPA and financial advisor. He specializes in helping entrepreneurs get their finances sorted out and in the process, to grow their businesses. He shares valuable insights on the moves that you need to be making with your taxes in light of the new tax codes being in effect.
How It All Began
He realized that many of his co-workers in the financial sector knew a lot about the financial industry, but they did not have much knowledge regarding their own personal finances. His co-workers knew Carter as the finance guru and brought their personal financial issues to him. This made him realize that other people that were not in the financial sector, like doctors and dentists, and plumbers, could also use his help. He left his corporate firm and started his own financial advisory service.
Carter grew up in a household of 9. His mother passed on due to heart issues when he was just 14 years old and his father passed on when he was 16. He remembers it was tough growing up. He learned from an early age that it’s not what happens in your life, but how you respond to it. He put himself through college and now owns his own successful company.
The Importance of Tax Efficiency
He explains that in America, tax efficiency is the least amount of money that a person can pay on their taxes so that said person can have more money in their pocket to do with it what they want to do with. Using the tax code in the correct way can lower your tax considerably. He explains that the average person can do the following to lower their tax: do your tax return throughout the year and not at the end of the year.
By placing as many allowances as you can on your W4 form, your salary will not be taxed so heavily and you will have that money to spend as you wish, throughout the year, instead of waiting for the end of the year to get your tax refund. The key then is to use that money, not as general spending money, but to pay off debt or invest it.
Monetizing Yourself
Monetizing your hobbies is a great way to get from the employee quadrant to the business owner quadrant. The reason that making money from your hobby is not just to make extra cash, but to be able to deduct expenses as a business owner.
If you have received a big tax return, wise ways to spend that money is to invest in yourself with a book, a course, or a conference, or you can pay off consumer debt, or you can place that money towards your retirement, or you can use the money to start your own business.
Carter explains that inflation makes our buying powerless and less every year. He urges everyone to have an emergency fund at their disposal and to invest their money for their future self. Investments have a bigger return on investment than an emergency savings account. For your pension, utilize the 41K match of your employer or pay money towards a rough RIA. Think of your future self.
Get in touch with Carter at https://www.cofieldadvisors.com/
WHAT YOU WILL LEARN IN THIS EPISODE
- What is tax efficiency?
- Discipline is needed to get your personal finance in order
- How to get out of the employee quadrant and into the business owner or investor quadrant
- Why monetizing your hobby will increase your tax deductions
- Wise ways to spend your tax return money
- How to think about the “future you”
- How inflation influences you
RESOURCES
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Betterment app – https://www.betterment.com/
- Acorn app – https://www.acorns.com/
