You’ll often hear that most household’s top expenses are: housing, transportation, and food.  There is a lot of wisdom and truth to this and these may very well be yours. And the implicit advice is great – know your top expenses.  I agree. However, some money seems to remain invisible, but is worth talking about. None of these will come as any great surprise to anyone likely to be reading this article, but there is huge potential for savings that many of us miss.

Since, the balance sheet, tracked over time, is the true test of your financial progress – it is important to consider each and every financial transaction.

To save you some time, I’ll share with you three that I’ve found to make a big difference for me personally.  

Most important to note: 

  • Each of these can be affected by the decisions we make
  • While it may seem like invisible money – it is as real as cash in your wallet

First up,


What did you pay in federal income tax last year?”

Most folks can give you the approximate amount they received as a refund.  EVERYONE who owed can tell you how much the check was that they had to write!  In reality, neither represents the total bill. These payments, upon filling out your return, are just adjustment to get the final amount correct.  It’s just an over-payment or underpayment, but most of us had been paying in all throughout the year.  

For some reason, almost no one you ask knows this number, but it’s usually substantial.  This is why income tax (particularly federal, because state is substantially lower in AZ, and not applicable at all in select states) is the first we will add to the invisible money category.  We don’t know this number simply because it comes out of our pocket indirectly.  However, this total number is good to know because then it’s no longer invisible to you.  

So, as you prepare your 2019 return, and consider all other factors (such as gifts from the government), make sure to note the line that reads, “total tax.”  It shouldn’t be too difficult to find on the 1040. Compare it to the rest of your expenses to contextualize it.  On a monthly basis, does it look like a cell phone bill? Car payment? Mortgage or rent payment? Do not accept this number as fixed.

Remember we can use pre-tax accounts as tools to affect the total (401k, 403b, 457b, traditional IRA, etc).  The more you apply to these accounts every month, the more you’ll see the tax bill drop next year. Discover this number for yourself and use it as motivation to save more of your hard earned dollars and watch them grow in your investment accounts!

You really can make a dent in these numbers when you learn and apply the 3rd decade curriculum to your life.  

Here’s our example since we’ve made it a focus:

The Irons household (two average incomes) federal income tax due:

2017 – $10,667

2018 – $6,996

2019 – $2,500-$3,000 (projected)

Stay tuned for Part II…


Author Bio: TK is a past 3rd Decade graduate who lives and breathes the philosophy taught in class.  He avidly researches personal finance and investing topics, and occasionally contributes thoughts here on the blog.  

He graduated cum laude from the University of Arizona with his BSBA.  As a longtime saver and investor, his net worth today is higher than the total number of dollars earned in his lifetime.  He keeps his annual living expenses around $10,000, owns his house free and clear, and has zero personal debt.  

 TK currently resides in Tucson, AZ with his wife, and works full-time as a firefighter.