In today’s world, there are many factors that increase our anxiety. Whether it is the continued effects of a global pandemic, uncertainty about the job market and economy, or simply the various stresses of everyday life, most people are experiencing greater anxiety than ever before. And in both good times and bad, there is one area that can consistently raise our stress levels: taxes.
At Fiat Wealth Management, partners Brad Gotto and Matt Stahl are on a mission to educate their clients and give them the confidence they need to make wise financial decisions. For Stahl, one key area of focus is reducing the stress and anxiety that people feel about taxes.
By becoming better-educated about the subject matter and being mindful of the factors leading to tax anxiety, Stahl says that every person can navigate tax planning with wisdom and confidence.
Bridging the Education Gap
When it comes to reducing tax anxiety, one of the most important factors is education, Stahl says.
“Something that seems complex and out of our range of understanding has the possibility of creating anxiety,” Stahl says. Because of the level of complexity in the tax code, even approaching it can seem daunting.
“The tax code itself is super long and super complicated,” Stahl says. “But when you strip away several layers, just down to how this applies to me personally, now you have power.”
In addition to understanding the tax code and its role in your finances, Stahl says it is equally important to take a step back and look at broader trends and patterns.
“When you dig deeper down the education path, you start to see how our world moves in trends that have been repeated historically,” Stahl says. “I think many of us underestimate the importance of history to create a perspective on where we are today, and where we could possibly head into the future.”
Stahl points to a recent conversation he had about marginal tax rates over the past 50 years. It was eye-opening to compare today with the marginal tax rate as recently as the late 1970s and early 1980s, an exercise that helps both Stahl and his clients better understand current trends.
When considering the role of COVID – and the rapid response of the federal government, which in turn has created and continues to expand the federal deficit– Stahl says that it is valuable to think like a lawmaker.
There are only a handful of ways that lawmakers can address this issue, Stahl explains. And lawmakers who want to be elected (or reelected) will most likely push forward policies that help the greatest number of people – and upset the fewest number of their constituents.
“When you have the ability to think about it from their perspective, then you can formulate an idea of where things could possibly go,” Stahl says. “I have this conversation frequently with clients, not necessarily to make predictions, but looking at history to understand today and look forward to the future.”
When you understand how the tax code influences your financial planning – and have a larger understanding of how it has performed historically – then you gain greater clarity and confidence. This, above all else, can help ease your anxiety.
Reducing the Information Overload
While education is an essential part of reducing tax anxiety, Stahl explains that the amount of information available online can actually increase our stress.
“I have observed that we tend to treat many things as emergencies that are not actual emergencies,” Stahl says. “This is related to the speed at which our world is moving and our access to information.”
Available information does not always equate to increased knowledge, Stahl says. Instead, people start to feel that things are happening outside of their control. That they are no longer in control of their own decisions. They know that information is available, and easier than ever to find, but they don’t know how to apply it.
“You can find information about anything now, but there is very little wisdom about how to actually apply that information and create something that is relevant to you,” Stahl says. “At Fiat, we work to make the very complex very simple.”
To achieve this, Stahl recommends taking a step back from the situation to observe what specifically is causing you to feel anxious.
“We have this expectation of things happening quickly, and it almost feels like every incident that arises is treated as a fight or flight response,” Stahl says. “If you have tax anxiety, it helps to step back and ask why it exists in the first place – and then take action from that position.”
Overcoming Tax Anxiety
Although tax anxiety can be incredibly stressful, Stahl explains that there are steps you can take to overcome the issue. By slowing down, observing the problem from an educational and historical perspective, and applying your knowledge systematically, you can avoid making rushed, emotional decisions. Instead, you will make informed, confident wealth management choices.
About the Founders
Matt Stahl and Brad Gotto are partners and private wealth managers of Fiat Wealth Management. They help clients understand tax planning in their financial journey, empowering them to make thoughtful, wise investment decisions.
To learn more about Fiat Wealth Management, including access to their weekly podcast, visit www.fiatwm.com or follow them on Instagram.
