10 Ways to Maximize your Salary
1. Set up direct deposit of your paycheck
You usually can save on banking fees with automatic payroll deposit. Plus, if you don’t have an actual check in hand, you might be less tempted to spend your pay so quickly. Also arrange to have a part of your check go automatically into a savings account or other investment option to build an emergency fund.
2. Manage your payroll withholding
Double-check your payroll withholding. Having too much taken out … and you’re giving the federal government a tax-free loan. Withhold too little, and you’ll end up with a big tax bill at the end of the year. If your circumstances change during the year change your withholding accordingly.
3. Contribute to your 401(k)
Sign up for your company-sponsored retirement plan and put away as much as you can. Many employers match at least a portion of what their workers put into retirement accounts, so try to contribute enough to get the maximum match from your company. Not only will you build up your retirement fund, but because you’re funding it with pretax dollars, the amount of your salary that is taxed by Uncle Sam is reduced.
4. Regularly reevaluate your plan contribution
Don’t just enroll in a retirement plan and forget it. Most 401(k) plans allow employees to allocate their investments. Take time to make sure your investment is appropriate. Redistribute most of your investments into less volatile areas of the market, and allocate only a small portion to "hot" sectors. Make sure you get quarterly statements from your plan administrator, and look at them to help you maximize your investments.
5. When changing jobs, roll over your retirement money
If you decide to take another job, don’t leave your old retirement fund behind. While in some cases a former employer will continue to manage the plan you started there, it generally pays to take your retirement account with you when you go. Put it into your new company’s 401(k) plan or roll it into an individual retirement account. Bundle your money into one retirement fund to help increase returns. Just make sure any transfer is done company-to-company to avoid having early distribution taxes taken out of the account.
6. Diagnose the best health coverage
Make time to go over your coverage to guarantee that you get the medical benefits you want for the least amount of money. Read the company’s benefit materials item by item to understand their benefit options. This can be a good way to maximize benefits and salary.
7. Dine at your company’s cafeteria plan of benefits
In addition to the more basic employee benefits, many companies offer programs so that workers can establish accounts with pretax dollars to cover uninsured health care expenses, dependent care costs and even the price of commuting. These can save you big since you’re paying with money before the Internal Revenue Service gets its cut. If your company doesn’t offer such benefits, lobby for them.
8. Examine all your potential company benefits
Some valuable benefits also might be hidden deep within your employee manual. Does your company offer life insurance? What about options to purchase disability or other forms of insurance at lower-cost group rates? Maybe your company offers tuition reimbursement for courses related to your job.
Some public companies sell their stock to employees at a discounted price. This practice builds in a profit for the employee shareholder and provides the worker with another investment vehicle. You can buy common stock of your own company very often at a discount and with no commission.
9. Refuse allowances
Companies often provide car allowances to employees who frequently travel. Ask if you can be given reimbursement for your actual auto expenses. The reason is that the car allowance is added to your income and is, therefore, subject to tax, whereas reimbursement is not.
10. Make sure your savings keep pace
Your boss finally signed off on your raise! When your salary increases, bump up your savings, too. If you get a 3 percent raise, increase your 401(k) contributions by the same percentage.