4-Step Solution to #IncomeInequality! #politics #finance

We had a family gathering recently. I’m not sure what other families talk about when they get together, but for some reason, our family discussions immediately turn to politics. After a round table discussion of the numerous candidates running for President, the topic turned to “world issues.” One issue in particularly was “income inequality.” My professor uncle wanted to know my solution to income inequality. After some thought, I propose a 4-step solution to income inequality:

1. Targeted Education
2. Save
3. Invest
4. Manage Taxes

Targeted Education

Naturally, education is the key to success, but not just any education. The U.S. economy is changing, which means the demand for certain skill sets is changing. We need to encourage our youth to pursue degrees in Science, Technology, Engineering, and Math (STEM). American corporations are desperate for employees with technical skills! For the top-paying STEM careers, click here.

Save!

Saving is fundamental! We must learn to save a portion of our income. Savings helps us weather the storms of life. Suze Orman recommends establishing an emergency fund of 8 months of living expenses. For details, click here.

Invest!

Investing is fundamental! With interest rates close to zero, the only way to earn decent returns on your money is to invest in the financial markets. Investing is risky, but the more more risk you take, the higher the possible ROI (return on investment). Inversely, the less risk you take, the lower the possible ROI. Determine how much risk you can handle. Do you have a safety cushion (i.e., emergency fund) to pay mandatory expenses while you are waiting for your returns? It may take years to reap the benefits of investing, so make sure you have the wherewithal to wait for the financial markets.

Taxes!

When it comes to taxes, the old saying, “It’s not what you make, it’s what you keep,” applies. Learn as much as you can about the U.S. tax code. Before the Internet, every tax season I would buy J.K. Lasser’s Your Income Tax 2016: For Preparing Your 2015 Tax Return. In this one large, yellow guide, I could learn everything I needed to know about filing upcoming tax returns. Where did I learn about taxes? My father. Every year, he completed his own tax returns. When I began working at age 19, and needed to file my own tax returns, he suggested I buy J.K. Lasser’s Your Income Tax 2016: For Preparing Your 2015 Tax Return. Believe it or not, some of my fondest memories revolve around sharing tax tips with my father. Learn the U.S. tax code. It is the key to controlling and managing your finances!

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