employee match | 365 DAYS OF MONEY TIPS | DAY 4

WORDS OF WISDOM

MONEY IS A SHORT-TERM RESULT THAT INCENTIVIZES SHORT-TERM DECISION MAKING.
- SIMON SINEK

WHY IT IS IMPORTANT: Employee matching allows you to maximize the funding that your employer gives you for putting money away in a retirement account (e.g., 403B or 401K). Employer match programs give you a percentage of your salary (free money) when you save a percentage of your salary. 

EXAMPLE: Your $50,000 salary would be taxed at 47,500 because you put $2500 away before your salary was taxed. 

EXAMPLE: You make $50,000 a year before taxes and your employer’s program gives you 5%. This means you would have to commit to $2500 (5% of $50,000) before your employer would “match” your $2500 (5%). 
Because employer retirement programs tend to be pre-taxed. This means that your income is viewed as less and therefore taxed as such. 

KEY POINT(S): Employer match programs are FREE MONEY! And requires you to commit a portion of your salary before you’re eligible for this free money. Employer match programs typically lower your taxable income. There is typically a period of time you must wait before (you’re vested) you have 100% access to employer contributions. 

MY EXPERIENCE: In the name of 300-word limits, I have always enrolled in employer match programs, typically at the minimum percentage to qualify. I currently auto increase my contributions to 1% on my birthday.  Every little bit counts. 

QUESTIONS FOR YOU: Can you afford to contribute to your employer match program? Are you auto-increasing your contributions? 

NEXT STEPS:

1. Check to see if your employer offers an employee match program.
2. Take advantage of your employer match program
3. Consider a Financial Coach at Eduential™.

SUGGESTED ONLINE REFERENCES:

• How Does an Employer Benefit From a 401(K) Matching Plan? by CHIZOBA MORAH
• Maximizing Your Employer 401(k) Match by MICHAEL RUBIN