I have heard it said before that death and taxes are the two things certain in life. Paying taxes is one of the biggest killer of wealth which is why great care must be taken to plan for financial success. To be successful one has to have a financial plan or the 3 biggest wealth killers will erode your spending power. I often say it’s not what you make but what you keep: If I make one million dollars a year and only get to keep $40,000, I am no better off than someone who makes $40,000 and keeps the whole amount.

This article discusses how the three biggest wealth killers: taxes, interest and inflation, affect your take home pay if you don’t have a financial plan.

Debt Statistics

According to nerd wallet, the average American household debt profile is as follows:

• Average credit card debt: $15,611
• Average mortgage debt: $155,192
• Average student loan debt: $32,264

Income Statistics

According to the last census data, the median American income is $53,046.

Implication of debt and income statistics

If this is the case then the average American pays $10,954 in interest, $15,823 in taxes and has inflation erode their wealth by $1,591 annually. This data is represented in the table and graph below:

This leaves the average America only 47% to spend after paying taxes, interest and inflation. Forty seven percent for the average American is $24,678. Considering the average living expenses is $26,400. The average American ends up -$1,722 in the hole each month as show below:

These are very pathetic statistics and not much is going to change unless you make it change. Not having a financial plan is no longer an option if you want to be financially successful. It is time to rise above average!!!

The next 3 articles will take each of these wealth killers and discuss them in more details.