Taxes For Dummies

Chapter 21

Tax-Wise Personal Finance Decisions

IN THIS CHAPTER

Viewing your finances holistically

Learning from common mistakes

Overcoming tax-planning hurdles

Managing your personal finances involves much more than simply investing money. It includes making all the pieces of your financial life fit together. And, just like designing a vacation itinerary, managing your personal finances means developing a strategy to make the best use of your limited dollars and being prepared to deal with some adversity and changes to the landscape.

Including Taxes in Your Financial Planning

Taxes are a large and vital piece of your financial puzzle. The following list shows some of the ways that tax issues are involved in making sound financial decisions throughout the year:

• Spending: The more you spend, the more taxes you’ll pay for taxed purchases and for being less able to take advantage of the many benefits in the tax code that require you to have money to invest in the first place. For example, contrary to the hucksters on late-night infomercials, you need money to purchase real estate, which offers many tax benefits (see Chapter 25). And because taxes are probably your largest or second ...