3 Month Life Update: I Don’t Get Personal Finance in America

Just when I thought I was getting into the groove of things, I started learning about personal finances and taxes in the U.S. 🤯 Back in November, I reached my goals of paying off all my student loans, attaining a $100K net worth, and buying my first home. As an early-in-career, I thought that I was on the right track with setting up my personal finances… and I didn’t expect the system to be that much different when I moved to the U.S.

I even re-read Ramit Sethi’s I Will Teach You To Be Rich (which one of my mentors recommended while I was in university) and learned about 401Ks and Roth IRAs. In my head, these two concepts were the American version of the RRSP and TFSA in Canada.

Let’s just say it is WAY more complex than that 🥲 🙄

@IRS: Why do you have to go and make things so complicated?

Last week while I was on vacation, I spent an entire day reading through the IRS website, watching YouTube videos, reading blog posts from financial institutions like Vanguard, and more. To my dismay, I’ve found that there are so many different variations and stipulations to the 401K and IRA accounts. To name a few retirement or investment vehicles:

  • 401K
  • Roth 401K
  • Roth IRA
  • Traditional IRA
  • HSA
  • Brokerage Account
  • Etc…

And then there’s income limits, contribution limits, age limits, and withdrawal conditions to avoid paying taxes and penalties. And for those who are high income earners, there are strategies to set up backdoor and mega backdoor conversions to optimize taxes and investments.

It’s a lot to take in… among everything else that is going on! The complexity of the entire system makes me question how the average person is supposed to know and navigate it all without being taught any of it in school. Perhaps this is a rant for another time, but it almost seems as if this overcomplicated system is designed to make us fail! Somewhere, the capitalistic masterminds are hoping that we don’t figure this out so that we must continue to work and pay taxes 👀

What’s next?

Despite the struggle so far, I am hopeful that I will get a hang of things as I continue finding more resources and talking to more people. I’ve also tried reaching out to Tax Consultants who specialize in Canadian and U.S. taxes, but their rates are at least $250/hour so I am going to do my own research and due diligence first, and then prepare only the most important questions.

At this point, I am looking forward to solidifying my investments and optimizing my taxes. In a year or so, I am interested in possibly buying another home… but we’ll have to see how the housing markets are performing and if my partner and I are ready to embrace the process, which—to be honest—I am not so keen to go through once again… and quite so soon 😅

Stay tuned!

For those who are interested in navigating this journey with me, I will be sharing my tips and learnings through the Personal Finance part of this blog. Please subscribe to my monthly newsletter to stay up to date with new content!

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