Finding ways to save money each month can be a challenge. This is why I believe taking advantage of your company’s 401k is critical for your future nest egg. I have learned from my own experiences with saving money that having money invested into your 401k pre-taxes is the quickest and simplest way to save money. We all know that once your monthly paycheck enters your checking account that money is usually allotted for expenses such as food, clothes, bills and that beloved mortgage.
This is why paying yourself first is the only way to build a successful retirement account. By allocating at least 3% of your monthly income into your 401k, you are adding $1200 dollars a year into your nest egg. This is a smart move. Most employers will match the contributions you place into your account. Do I hear free money? I’m not sure about you, but I love free money! This is a 100% gift on your contributions each month. You cannot get a return of 100% on any stock or real estate investment. If you earn $40k a year and avert 3% into your 401k each month, then your employer matches that amount, you are saving 6% and a total of $2400 a month. I promise you will not miss the extra $100 a month (which will be less once it is taxed and entered into your checking account!).
Year after year, you will see an upward trajectory from the simple fact of paying yourself first and we have not even factored in the compounding interest. Here is your assignment: contact your HR today and ask about your company’s retirement savings plan and then put a plan into place that will help you start saving for the future. It is never too early or too late to start contributing. This article is brought to you by your fellow saver.