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Preparing Your Taxes? Time to Organize Your Personal Finances

financial planning

Personal finance and tracking finances are two of the issues that we care about here at Mint. Learn more with great personal finance tips in our blog article index.

It’s tax season once again, and to prepare your returns, we know that you’re scraping together a lot of personal finance documents: W2′s, 1099′s, bank statements, brokerage statements, health care and moving expenses, etc., etc. At Mint, we’re always looking for smart ways to simplify, to increase productivity, and to hone our money management skills. Why not take advantage of the work you’ve already done for tax preparation to get yourself financially organized for the year?

Here are the steps we recommend you take to organize your personal finances:

Sort and Purge Documents

It’s important to know which financial documents you need to keep and which you can throw away.

Here’s what you toss: Throw out old receipts unless they’re needed for taxes. Keep year-end mortgage and loan summaries that show the full year’s payments including interest, and toss the monthly statements. Get rid of old bills, such as utility or phone bills, unless you’re keeping them as records of your business expenses.

Here’s what you keep: Save W-2 and 1099 forms, year-end credit card summaries, yearly mortgage and property tax statements, or any tax-deductible personal and business expenses for at least seven years.

All Your Personal Finance Documents in One Place

  1. Collect the personal finance documents you need to keep in a simple 3-ring binder.
    • Use divider tabs to separate your money management documents into categories such as banks, loans, credit cards, bills, receipts, investments, budgets, and warranties. Once made, it’ll be easy to maintain throughout the year.
    • Keep irreplaceable documents in a fire-proof/flood-proof safe or in a bank.
  2. Now you’ve got 90% of the documents you need to see how you’re doing versus Mint’s Three Principles of Personal Finance:
    • Spend less than you Earn
    • Make your Money Work for You
    • Prepare for the Unexpected

Spending Less than you Earn?

  1. Compare your actual spending to your budget and income. In which 2-3 categories are you consistently overspending? Where can you cut back? What’s a more realistic budget?
  2. If you don’t have a budget, you can start one by using Mint’s new budget tool which allows you to set budgets in each of your spending categories. Mint can also alert you if you exceed the budgets you’ve set.

Is Your Money Working as Hard as You Are?

Sound money management requires us to evaluate our savings and investments regularly, and to schedule a major review once a year. A few suggestions to consider:

  1. Think about last minute actions you can take before tax filing time. Review your deductions and maximize your contributions to your retirement accounts while you still can! Check out Mint’s new IRA Advisor tool for a simple and personalized recommendation for the right IRA for you.
  2. Using your W2, make sure that you’re on track to fully maximize your employer’s 401k plan.
  3. Look for non- and low-performing investments and consolidate them if necessary, being mindful of capital gains, losses and tax implications.
  4. If at this point, you’re thinking of hiring professional help, here’s how you can find a personal finance guru that’s right for you.

Call your bank, your bank’s biggest competitor and a leading online bank (or two) to see if there’s a higher interest option for your liquid accounts. Here are a few options for your short-term funds:

Earn more interest on the money you have in checking and savings accounts.

E*Trade Max Rate Savings
Sign Up
CapitalOne Online Savings Account
Sign Up

Prepare for the Unexpected

Solid personal financial planning also requires that you review your insurance policies and estate plans for relevancy and accuracy. For complex situations, you may want to consult with your personal financial advisor or your lawyer.

Here are a few questions to think over:

  1. Have your financial circumstances changed?
  2. Are your life, disability, homeowners/renters, and car insurance policies still appropriate?
  3. Do your will and/or trust still reflect your family situation? And your wishes?

Make tax preparation a productive use of time. With some simple document organization, you can have all the information you need to answer some key questions about your financial health … and make some smart decisions to improve it over the next year.

Mint Asks: Do you have any money management tips or tricks for organizing and cleaning up your personal finances during and after tax season?