Taxes Are the Golf Balls of Personal Finance

For the professional golfer, hitting your ball into the water has its price:

  • It can be embarrassing. The internet is littered with stories and images of PGA Tour players dropping their trousers to take swings at errant, but playable, shots that have landed in hazard areas.
  • It can cost you a tournament. Greg Norman, the victim of so many gut-wrenching moments in majors history, infamously choked away a six-stroke lead in the final round of the 1996 Masters. It was a ball in the water at 16 that proved to be the nail in his coffin that day. Norman carded a double bogey on that hole and was forced to watch as Nick Faldo cruised to a five shot victory and his third green jacket.
  • It can also get you … banned from Australia? In 2011, John Daly went full Tin Cup and hit seven straight balls into the water before walking off in the middle of his round during the PGA Australian Open. Tournament officials were none too pleased with Daly’s antics and said he will never again be welcome at the Australian Open.

Fortunately for PGA professionals, one thing that they don’t have to worry about is the cost of the balls they’re losing since sponsors are actually paying them to play their specific brand.

Unfortunately for me, my golf game has not yet attracted of any sponsors, so I’m stuck paying for my own equipment. This is part of the reason why I’m content playing with your average discount-brand golf ball.

It’s not that I have anything against expensive golf balls. I’ve been known to pocket a ProV1 or two if I happen to find one in the woods while looking for my own errant drive. The feel and compression you get when playing a premium ball are noticeable versus your standard bargain model. I won’t argue that.

For me, golf is expensive enough. Between the clubs, greens fees, and investment of time, golf can be demanding on the wallet and the schedule. I don’t need the extra mental baggage of leaving behind $5 every time I hit an errant drive into the woods or water.      

You could say, expensive golf balls don’t align with my goals.

For a professional golfer, playing golf is their livelihood. It’s also the livelihood of the hundred or so other pros they’re competing against on a weekly basis. Over the course of the season, they’re in competition for a limited amount of prize money. Their goal is to capture as much of that prize money as they possibly can, so it makes sense to seek every possible advantage, including using the best equipment.

I play golf for fun, even though it doesn’t always look that way. It’s a recreational activity, a break from my livelihood if you will. The people I play with are friends, not competitors. 

Playing golf makes me happy. It’s something I want to do, so I’m ok spending a little money on a greens fee and a cart rental to tool around outdoors for a few hours.   

I do not want to pay money to replace golf balls I lose, which has been known to happen on occasion. Losing golf balls does not make me happy. Losing expensive golf balls would make me even less happy.

Taxes are the golf balls of personal finance.

No one really wants to pay taxes, just like no one wants to pay for golf balls, but it’s a necessary price of admission.

Paying taxes makes no one happy, but paying more in taxes than we need to makes us even less happy.

They are a necessary expense. Just like you need golf balls to play golf, paying taxes is a part of being an American citizen. However, the decisions we make around our finances can impact how much tax we have to pay and when we pay them.

Some things to consider:

Know where you are on the course: If you’re on the front 9 (aka early-career with earning still growing), use a Roth IRA or Roth 401(k) option to save after-tax dollars and let them grow. If you’re on the back 9 (aka peak earnings years and higher marginal brackets than in retirement), max out your available pretax options with 401(k) and deductible IRA contributions.

If you’re already in the club house then plan for big ticket items in retirement, like dream vacations and car upgrades, by using strategic withdraws to accumulate cash so you’re not faced with large tax bills that erode your buying power.  

If you find yourself in the woods, don’t forget to pocket those Pro V1s. There are numerous deductions and credits within the tax code that can sometimes go overlooked. Having a CPA of CFP® as part of your team can help ensure you’re not missing out on any “freebies.” 

Tax planning is an essential part of a holistic financial plan no matter what hole you’re on in the game of life. Smart planning can help ensure more of your dollars go toward big drives in the fairway and less end up in the drink.

Wondering where your golf balls are landing? We’re here to help – answer a few quick questions to master saving for retirement.

Judson Meinhart, CFP®, BFATM, MBA
Financial Advisor, Manager of Financial Planning

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