Simplified Explanation: Based on the information we just looked at, how much you owe plus how much your monthly expenses are, this is the least you will need to make to survive. Now it is time to talk about getting a full-time job to make that money you need and want.

Real Life: Just because you work a 9AM–5PM job does not mean you are bringing in that amount of money you need. Every time you make money from a full-time or part-time job, that employer is mandated, by law, to take out taxes, and not a small amount even. They are mandated to take from your paycheck these items: social security tax, unemployment tax, federal taxes, and state taxes. Everyone gets paid before you do. Then, depending on the benefits you accepted from your employer, you also reduce your paycheck by that amount as well. This is okay, though, remember what we said, we will teach you how to pay as little as possible from your paycheck, and what you do pay, you can tell yourself that your taxes go to paying for those in need.

Just FYI, your employer pays many of these taxes as well, so you are costing them more than just your salary, so don’t blame your employer. Taxes are government mandated and the benefits that come from being a full-time employee benefit you.

Full Time Work – When you work full time there are certain allotments of money that are paid before you. There is a reason why you may have made $1,000, but only walked away with $600 in your paycheck. Check your paystub (attached to your check or if direct deposited, ask for a statement) to see what was removed:

• Federal Government - FICA - Federal Insurance Contributions Act. This includes Social Security and Medicare Tax –

1. Federal Income Taxes – The U.S. government takes a percentage of your pay to pay taxes at the end of the year. This is based on a W-9 form you fill out when hired.

1. Unemployment Tax – If you are laid off, at no fault of your own, you are paid Unemployment Benefits, which is a set amount of money that you can claim, for a certain amount of time until you find future employment.

Part Time Work – In part-time work, you are still being paid by an employer who is mandated by the government to hold a certain amount of money. Normally there are no benefits as a part time worker.

• Social Security Tax – In retirement years, senior citizens will be able to draw from money the government has taken from them - during their working years - to pay for their living after 65.

Contract Work – In a gig economy, where you can have many side jobs, working with different companies to perform many services as a non-employed independent contractor, taxes or payment for benefits are not withdrawn from your paycheck; instead, you are to pay those bills quarterly to the government or in one lump sum at the end of the year. This may seem great, not having your taxes withdrawn from each paycheck, but at the end of the year, when you pay taxes, the taxes become due, and you may be writing a large check to your federal government at the end of the year. The amount increases as your total income increases. But, from your client, you receive what you were promised in full. These taxes, you eventually have to pay, can be reduced with each of expense you spend on your side gig, such as miles driven to or during your side gig or personal tax deductions, including having kids or donating to non-profit organizations.

Owning a Business – When you own your own business - we will get into this later in the book - you pay yourself a guaranteed payment as an owner, depending on your state you may not have to pay taxes on this money, or you can pay yourself as an employee. You never want to buy anything with your business credit card that can be seen as personal purchases or paying yourself right out of your business bank account. You want to create a barrier, between your personal money and business money, from the very beginning. This separation will allow you to say to the Internal Revenue Service, a government entity that makes you pay your taxes correctly, that you keep your personal and private money separate, so if they come after your company, you don’t have the liability of losing your personal money to the government. If you pay yourself as an employee then the same taxes are taken out of your regular paychecks as would be if you were a normal full-time employee.

If you are taking the money as a guaranteed payment, for services as an owner, you have to pay both the employer’s side and your personal side of FICA and all employment taxes. This makes it so Social Security and Medicare tax still gets their full amount. But because you are an owner and you would have to fire yourself, you may not have to pay Unemployment Tax. Check with your individual state.

Investing – Just because you sell a stock, commodity like gold, or cryptocurrency, does not mean you get out of taxes and fees. Before we tell you which ones, let’s talk about the five main types of investing:

• Retirement – In retirement there are many programs you can fund: a 401k (through your employer), Roth IRA (Investment program where you get taxed when you move it into the program), Traditional IRA (Investment program where you get taxed when you withdraw the funds for personal use), Pension (an investment fund your employer or union controls), etc.

1. Capital Gains – In all of these, except Roth IRA, you must pay capital gains taxes on any increase in the value of the investment when you are withdrawing the amount.

1. Capital Gains – All increases in value created by fluctuations in the market are taxed.

1. Capital Gains - All increases in value created by fluctuations in the market are taxed.

1. Capital Gains - When you have it for less than one year, you pay short term capital gains, after that time, you pay long-term capital gains tax, similar to a stock or commodity.

1. Capital Gains – If you were to sell it in less than two years or rent it out and then sell it later, you would have to pay capital gains tax to the federal government.

Overview - Income is very important, but you should know beforehand that you rarely ever get away from taxes and if you don’t pay your taxes, the IRS can come after you and it is not pleasant.

The federal government is going to take from you to fund their existence, the best thing is to be informed about the taxes and, if possible, only pay the minimal amounts possible within the law. You are under no obligation to pay the federal or state government more than they require.

You are the best arbiter and distributor of your money. Make sure you have control over each part. The best way to do that is with a budget, which is a form you put together that gives every dollar you receive a chore and every chore a spending limit. This is so that when you have your money deposited in your bank account, you know exactly where it goes and how you can spend it. More on this in a future chapter.