The promise of free money is usually quite appealing.
After all, the stimulus checks handed out by Congress in the first few months of the pandemic have been extremely popular, and nearly 3 million people have signed a petition calling for more.
So why, then, is 1 in 10 working Americans missing out on the thousands of free money that has been available now and for a long time?
Although some people are unfamiliar with these programs or do not think they can use them, both issues are easily resolved. Here’s how to make sure get the money owed to you.
Millions don’t maximize their 401 (k) match
A 401 (k) match from your employer is the closest thing a lot of people get free currency.
These common programs see your business match whatever you contribute to a 401 (k) retirement account, up to a certain limit.
This benefit is part of your pay when you get a job, so if you don’t take full advantage of it, it’s like not taking part of your pay.
Suppose you earn $ 60,000 per year and your employer offers dollar-for-dollar consideration of up to 6% of your salary. This means that the maximum your employer will give you is $ 3,600 each year.
But if you only put $ 2,000 into your 401 (k), your employer only puts $ 2,000 – and you leave $ 1,600 on the table.
Opportunities like this don’t present themselves often in life, yet 17.5 million Americans are guilty of not taking advantage of the full offer they receive, according to a recent report. investigation by MagnifyMoney.
Why don’t people contribute more?
A small number of respondents say they don’t understand how 401 (k) pension plans work (6%) or whether their company offers a match (17%).
If you’re in this group it’s understandable, but when so much money is at stake, you’ll want to set up a discussion with your HR rep immediately.
Some employees (12%) say they want to wait until they are older to contribute. But as any financial expert will tell you, contributing as early as possible is essential because it gives your investments more time to grow.
The main reason employees do not take full advantage of it is affordability; over a third of respondents say they just can’t contribute as much as they would like. This makes sense, especially at a time when the budgets of many families are stretched to the point of breaking.
Normally the answer would be to rely on the power of invest even small amounts of money – but with a 401 (k) match, you can have another solution.
How to start taking full advantage
If you have enough money to spend, your first step should be to set up automatic withdrawals from your paycheck. A “set-it-and-forget-it” approach will ensure you get the most matches.
Remember that you can always invest more than the amount your employer has paid for. And since these automatic withdrawals usually come from your pre-tax income, you won’t have to pay tax on your contributions.
On the other hand, if you’re struggling to find the money to make your contributions, a new company was launched last year to help you solve this exact problem.
The company is going advance you the money you need to get the full match, with no credit check or upfront fees. Then, once your employer matches your contributions, you will withdraw from your 401 (k) to pay off the business, plus a small portion of the money you got through the match.
It’s not as much pure profit as what you would get by contributing your own money, but it’s way better than missing out on the free money offer.
If not, you can try some of these proven strategies to find the cash you need to get the most money you can:
Get a better mortgage rate. Interest rates are historically low at the moment; if you refinance you could save hundreds every month and thousands over the life of your loan.
Consolidate your high interest debt. With interest rates exceeding 20%, credit cards make it easy to get into debt. Combining all of your balances into one loan with a lower interest rate can help you save hundreds and get out of debt faster.
Stop paying too much online. It is difficult to be sure that you are getting the best price when there are thousands of stores on the Internet. Try a free browser extension which automatically applies coupon codes and finds lower prices when you shop online.
Convert pennies into a wallet. Even if you don’t have a lot of money to spend, you can still get some returns in today’s vibrant stock market. A popular app will help you invest your “spare currency” daily shopping.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.