Documents to Keep in Order to Make Taxes Easier
It's tax season. For some us, it can be a confusing, frustrating and stressful time, but don’t worry, you’re not alone. The good news is that filing your taxes doesn’t have to be a nightmare. Keeping certain documents in order can make your filing experience easier and less stressful.
Here’s what we recommend:
Maintain paper and electronic filing systems. The most important thing you can do to make tax time easier on yourself is to stay organized throughout the year. While you should also find a place on your computer for any financial documents to go, the majority of your financial information should exist in paper format, as well.
For the paper documents, The Motley Fool suggests a three folder system. One folder for all of your income-based documents (pay stubs, bank statements), one folder for expenses and deductions (work-related costs, medical bills, charitable donations), and one for any investments you may have.
Here’s a quick checklist of applicable documents that you’ll want to have filed away:
• pay stubs and bank statements,
• big ticket receipts,
• proof of a major life change (birth, death, new home, new job),
• previous year’s tax statements and
• copies of W-2, 1099 forms.
It’s not over once your taxes are all filed and your returns show up in the mail. To be really safe, you should hang on to your filing history for 7 to 10 years. It may seem excessive, and in the vast majority of cases, it is. But the IRS can audit any individual as far back as they like if they have reason to suspect fraud. To make sure you’re covered in the rare instance of an audit, it’s best to have your documentation readily available.
The best way to make tax season less stressful is to stay on top of it throughout the year. If you don’t already have a filing system, start one today. Get organized in a way that works for you and add relevant documents to the bunch whenever you encounter one. Taking these steps will ensure that, filling out your taxes will be quicker and easier than ever before.
Understanding Your Credit Score and How to Improve It
Whether you’re just getting married, heading to college, or looking to buy a house, three simple numbers could determine what money you are qualified to borrow. Your credit score, usually ranging from 300-850, is a number boiled down from a credit report that details your credit history and determines how risky it is to lend you money. But how are those numbers calculated and how can you see your score go up?
Understanding Your Score
Your credit history information comes from a credit report compiled by three data collectors: Equifax, Experian, and Transunion. Credit score companies then use their specific formulas to translate that report into a single number. The most widely used credit scores are FICO Scores, the credit scores created by Fair Isaac Corporation. 90% of top lenders use FICO Scores to help them make credit-related decisions. Your FICO score takes every credit report you might have from each card you hold, and makes a total evaluation, 300 being risky and thus “poor” credit and 850 being stellar.
FICO is not the only credit score you can have and each has its own range. See the most common credit scoring models below:
■ FICO Score: 300-850
The newest version, FICO Next Generation, or NextGen scores, have scales with a high score of 950. FICO uses a different algorithm for each of the data collectors listed above to give information fitted to their scores. Each collector uses different information about you and your history and FICO fits your information for them to understand in their model.
Unlike FICO, VantageScore has one algorithm, combining data collectors’ information into one universal number that combines all the information any data collector might have.
Developed by Experian, this score is for consumers only, meaning lenders will not see it or use it in determining your credit. It is just for you.
While VantageScore looks at recent credit history, TransRisk uses your lifetime’s worth of data to build your score. If you typically have great credit all your life, but recently went through a slump, TransRisk will take that into account.
Improving Your Score
If you know your credit score, you might not know how you got that score, or how to improve it. Fair Isaac Corporation isn’t obligated to reveal how it determines its credit scores, so you are not the only one guessing. Roughly, FICO scores are calculated by “payment history (35%), amount owed (30%), length of credit history (15%), new credit (10%) and type of credit used (10%).” In other words, they are looking at if you pay on time, if you have filed for bankruptcy, how much debt you carry combined, how actively you use your card, the proportion of new accounts to existing ones, and the kinds of credit or loans you have been approved for. Read below to see some tips on how to improve your credit score.
1. Check your score frequently
2. Set up payment reminders
3. Keep an eye on how many cards you have
If you keep learning about your spending and how it influences your credit score, it could be beneficial when deciding on lenders. If you have a credit card with us, check out your activity online here. If you’re happy with your credit score and are ready to look into mortgages and loans for your life’s next step, see more information here.
5 Financial Tips For College Students
Whether you’re getting set to enroll in your first semester of college classes or you’re going back for your MastersMaster’s degree, college students have a lot to consider when it comes to their finances. College can be one of the most exciting and rewarding periods in one’s life, but with many potential sources of stress, it can begin to feel like a burden, as well.
If you have a good hold on your finances, you will help alleviate some of that potential stress. You’ll also be better prepared for life after graduation. In hopes of helping you live your best life, we’ve put together five tips to help you maintain control of your finances while in college.
Budget, budget, budget. Whether you have $5 or $500 to spend, nothing is more important than staying within your means. It’s effectively what keeps your financial ship afloat as you traverse life’s uncertain seas. So learn how to budget early. Make sure you always know your regular income and expenses. In other words, keep a log of how much money you make and how much money you owe on a regular basis for things like bills and rent. Once you do this, you’ll begin to have an idea of how much spending money you have and how much you can afford to put in savings.
Show some restraint. College can be an incredibly fun and tempting time. However, it’s important that, once you make your budget, you stand by it. You may run into a friend or acquaintance that simply has a bigger budget than you. That’s okay. It’s important for you to learn how to resist the pressure of simply going along with what others do. Sometimes a group of people may decide to go to a restaurant that you know is too expensive for your budget. That’s okay. Learn how to show some restraint and you will certainly be better for it in the long run.
Use your credit card wisely. Not every college student needs a credit card, but opening one can be a wise choice. As you may have heard before, there is “bad credit” but there is also such a thing as “good credit,” and it’s actually very important for getting loans for a car or home down the line. The best way for you to start building credit is by using a credit card responsibly. That means staying well under your credit limit and making at least your minimum payment each month.
Know where you stand with financial aid. If you’ve taken out student loans or received financial aid from the institution you are attending, make sure you stay up to date on where those payments and disbursements stand. Even in the case of scholarships, it’s important not to take them for granted. As we have said before, there is no such thing as free money. Make your payments on time and/or know your timetables for repayment once you graduate.
Shop smart. Even when you’re in college and trying your best to be frugal, you can’t avoid spending money. Whether it’s food, clothing, or supplies for your apartment or dorm room, you would be wise to learn how to comparison shop, find discounts, and buy secondhand. Though you can’t avoid buying things, you can avoid buying things that are unnecessary or extravagant.
Whether you’re a high school senior preparing for your first college experience, or a seasoned upperclassman, we hope you’ve found these tips helpful when it comes to managing your finances wisely. While you’ll no doubt learn a lot in the classes you’ll take, it’s possible that the most important thing you’ll take with you after college are the habits you establish.
How To Help Your Child Build Credit
We all want the best for our kids. And in order to teach them well, it takes a mix of leading by example and letting them discover by doing. This is especially true when it comes to teaching them good financial habits. Having good credit as an adult is made all the easier when we establish good financial habits as a child.
Although every family is different and it’s up to you to determine what is right for your family, we’ve made 3 basic recommendations that should help enforce good financial habits in your child.
Get them a checking account and a debit card. The first thing you can do is wean them off the piggy bank and introduce them to what money looks like in real life. At its most basic level, this is a checking account and a debit card. This will teach them that managing your money isn’t as simple as counting your pennies. Though maintaining a checking account won’t start building credit in the child’s name, it lets them take that important first step of accepting accountability.
Open a savings account. Once they’ve got the basics of balancing a checking account, you could open a savings account in their name. This will introduce them to the idea of interest and get them thinking about saving for their future, what their goals are and how they will get there.
Talk to them about good financial habits. Finances are complicated. Especially for kids, they can be overwhelming. Take the time to explain complicated financial concepts to them. Talk to them about expenses. Take them to the bank with you. Encourage them to get a job. Explain what all the numbers on their paycheck mean. You probably have an opportunity every day to increase your child’s financial literacy. Even the smallest experience helps inform their future.
If you want to set your child up for financial success in adulthood, do what you can to give them a solid foundation. Good credit starts with a good understanding of financial responsibility. Set a good example by being financially responsible yourself and by sharing some of your knowledge and experience with them. Then, when they’re ready, make them accountable for their own finances with checking and savings accounts.
Cybersecurity 101: Reducing Your Risk of Identity Theft
Below are a few things you can do to protect your identity from cybercriminals.
Vary your passwords. When it comes to deterring cybercriminals, you have to make it difficult for them. Don’t make it easier by using the exact same password for everything you need to access online. If you make them all the same and your password for one site somehow gets compromised, all of a sudden that cybercriminal would have access to all of your passwords. Though it may seem like a hassle, this potentially very bad situation could be avoided if you create unique passwords for each site you use. Changing your passwords on a regular basis is also a good idea.
Be wary of suspicious emails. Some scammers accomplish their crimes by fooling people into thinking they are legitimate, or someone they actually are not. Be vigilant when reading emails and don’t be afraid to disregard or report anything that seems suspicious. Most important of all, never send money to anyone who asks through email. Know that the IRS and other government organizations will never contact you via email requesting personal or account information, nor will SNB. Do not respond to anyone claiming to need your personal information.
Pay attention to your accounts. One of the worst things you could do is take a “set it and forget it” approach to your finances. In a world of direct deposit and auto-pay, it can be easy to do that. But ignoring your bank statements could leave the door open for unauthorized activity to go unnoticed. The best way to stay on top of all of your financial activity is to make a habit of checking in on all of your accounts on a regular basis.
Check Daily Fraud Alerts. Straight from SNB, Fraud Alerts will keep you up to date with the latest news of online threats, arrests, and more. It is a great resource full of information about telephone scams, what to do if you think you’ve been a victim of online fraud, how to keep your mobile device safe, and more. Whether you want to get more information about a specific topic or just want to be better educated about identity theft, this is the place.
Identity theft is a real concern. But with a little vigilance you can help reduce your chances of becoming a victim. Thanks for reading and stay tuned to our blog for more tips from SNB on how to live a healthy financial life.
What To Expect When Buying Your First Home
For most of us, a home is the largest purchase we will ever make. At the same time, a mortgage is likely the largest loan we’ll ever take on. Beyond these financial realities, buying your first home is a huge step! When you go from renting to buying, you take on more long-term responsibilities.
But don’t worry: you can do it! If you approach the process with an open mind and a willingness to do your research, you can buy your first home like a seasoned pro. We've compiled 5 of the most important things that you need to be prepared for when you’re about to buy your first home.
Get organized. You will save yourself a lot of headaches if you take this tip seriously and start on it early. You’ll want to get yourself organized across the board. From the physical circumstances of getting your old place ready to move out of, to the nitty gritty numbers of income and more, getting organized now means less scrambling and panicking later.
Find an agent you can trust. As a first-time home buyer, you are a stranger a long way from home. That’s why you need to find a trusty local who can show you the ropes and help you get the most out of your experience. Do your due diligence on the real estate agents in your area and pick one that has lots of experience buying and selling homes in the area. They’ll help you get a good home inspection and walk you through the often complicated process.
Weigh your mortgage options. Here’s where it is crucial to know your numbers. There are lots of mortgages out there. It is essential that you pick the right one for your finances. Cleaning up your credit before you start applying is one good way to make sure you’re putting your best foot forward and seeing the best possible rates for you. Though you may want a shorter term, remember the most important factor is how much you can afford monthly, right now.
Budget for extras. If there’s one thing that is certain about buying a home, it’s that the actual price is always higher than the sticker price. It’s similar to buying a car. You may know how much the sticker price for the car is, but once you get it home you’ll have to fill the tank with gas, get an oil change, maybe fix that ding in the bumper. Whether those expenses are new appliances or simply small repairs here or there, you need to be prepared to foot the bill for those extras in your home, too.
Don’t be afraid to walk away. Let’s go back to the beginning here and remember that this is the biggest investment you will probably ever make. It’s possible that you could feel pressured or rushed at points during the process. Don’t let this happen to you. Ultimately, if it’s not the right fit or you’re having serious doubts, don’t be afraid to walk away. You aren’t committed to the purchase until you sign on the dotted line.
We hope these tips have helped to ease your mind a little bit as you approach the purchase of your first home. Are you ready to talk to a loan officer or have a look at today’s interest rates? Head over to our Mortgage Center to get a personalized quote, ask questions, and more.
4 Financial Habits You Should Be Practicing Right Now
Financial pressures and decisions can be overwhelming. The truth is that while everyone’s financial situation will be a little different, there are fundamental things we can each do to improve our relationship with our finances.
If you’re worried about money and want to be sure you can count on a brighter future for yourself and your family, you can start by adopting better financial habits. Here are 4 of the most important that we think will help you feel more confident going forward.
Know where you stand. One serious mistake many people make with their finances is simply not knowing where they stand. Whether that’s with credit card or other debts, savings and checking accounts, retirement or investments, the first step to improving your circumstances is to know exactly where you stand. Ignoring the realities of your financial situation could be paving the way for troubles down the road. Just don’t do it.
Set goals. After you know where you stand financially, you can decide how you want to improve. The best way to improve at anything is to set tangible goals. So instead of saying, “I want to save more money this year,” say “I want to save x amount this year,” or “I want to end the year with x amount in my savings.” Only by way of a goal can you accurately judge your progress. So if you say, “I want to deposit $100 from every paycheck into my retirement,” you can actually assess whether or not you reached that goal.
Use all the technological tools available to you. There’s no doubt that keeping track of and staying on top of all of your financial responsibilities is a heavy load. That’s why you’d be missing out if you weren’t taking advantage of all the technological tools available to help manage your finances. From the budgeting tools available through SNB’s online banking to the various apps that are available to help you track personal spending, there are lots of ways for you to stay on top of your ending habits and save money.
Work a little bit at a time. While it can be tempting to want to make big moves at times, generally it is best to make money moves in small steps. Saving for retirement? It’s great to start early and to put aside a little at a time. That way it doesn’t negatively impact your ability to live today but it also contributes positively to your future. Trying to erase loan or credit card debt? Determine what you can afford and make a commitment to pay a certain amount each month.
Even the most successful money managers will tell you, financial independence doesn’t happen overnight. You need to develop good financial habits and commit to keeping them. If you follow the four listed above, you can rest a little easier knowing your good financial habits will reward you in the future.