Free Money Plan With 401K Employer Match- yes, it is free money to save …updated post
Those who are affluent in financial planning and saving will tell anyone how important it is to have a financial plan. One thing that everyone can agree on is the value of financial security. In an uncertain economy, it is important to do all that you can to help solidify your financial future. This begins with a mindset for financial planning – free money with a 401K employer match. If you begin your investing early, with a small saving, gradually invest larger amounts, and before you realize it, you will have a very significant investment portfolio.
Why Set Goals?
Just like with any other area of your life, goals give you a focus for your efforts. Without them, it is hard to plan for anything. In financial situations, a lack of goals can lead to shortsightedness and inadequate funds for important things like college, retirement, and vacations.
Goal setting has become a necessary part of all life factors, and it cannot start without a person seeing the need. With that in mind, what are the goals you have in your life? Think not just about this day or next month but in the long term; what do you want your money to do for you? It is a good place to start.
Where to Make Money While Saving Money
One of the most significant financial and savings goals should be with your company’s 401K retirement pre-tax payroll deductions. If you are serious about your future, this is the first step to starting a productive plan for your life and your retirement. This money is not taxed until you draw from the account. One of the best retirement plans out there.
401K Retirement Plans
These retirement accounts are often held with your employer, (not always, as you can have a 401K account with an investor), and they offer an incentive to add to your contribution. Some companies may offer a percentage of ½% of your contribution. This would mean if you are saving 4% of your salary, they will match with 2%. Not all companies contribute, the law does not require the employer to contribute; however, larger companies usually do.
You are given choices of what to invest your money in. The investments are usually bonds, stocks, mutual funds, and foreign investments. Stocks are somewhat aggressive financial planning, and if the stock market goes down, your money goes down. However, when you go the safe route, you are likely to be at an advantage. An advantage is usually diversification. A mixture of US investments of stocks, bonds, mutual funds, and foreign investments means that if something goes wrong, you do not lose your britches.
The Market Watch put it this way: Clients wanted to know if foreign exposure through shares of U.S. multinational companies is enough. The answer was it is not. The example was; “Imagine you are loading people of different shapes and sizes into a boat. The sensible choice would be to distribute the weight carefully. Otherwise, the vessel might flip and sink”
“The same is very true as stated above for an investment portfolio. Foreign stocks and bonds, similar to U. S. stocks, provide a counterbalance to large U. S. Stocks. They keep the portfolio steady and seaworthy.”
You need a balance so that your account remains focused on the not getting rich fast scheme. It just does not work that way. Taking it slow and easy is best and you will see the best results.
Note: It is always beneficial to you to invest the largest percentage your employer will allow, but always within what you can afford.
How To Max 401K -The match is free money added to your account
You cannot get the employer’s contribution until you are fully vested with your account. This may be six months or more, or a different strategy of how long you have been with the company. Some companies will let you start your savings immediately. There may be restrictions when you can start investing your money in the 401K plan. Their contribution may begin at a later date. Ask questions, read articles, get advice, and make it great for you.
Financial Goal Setting -What To Do with the Day-to-Day Savings
- Write it down – When the details are just in your mind, they can get sketchy from time to time and that leaves you nowhere. Use a pencil so that you can change and modify them as needed. List them in no particular order but just get them down so you can keep on to the next step.
- Make your goals specific – What have you written down? If you wrote something like “I want to buy a new car,” this is excessively vague. We all would like a new car. How can you turn that into a strategy that you can actually implement in a timeline? Instead, say, “I would like to save $3,000 towards a new car by December.” Now, you have a timeline and a specific money goal. To that end, you can watch and see how you can set aside that money.
- Break them down – The above goal can even be dissected into a smaller goal that is more manageable. If you are having trouble, making ends meet now, saving $3,000 might as well be like saving a million bucks. Nevertheless, if you set short, medium, and long-term goals to reach the ultimate financial goal, you can get your head around it. Therefore, here goes: “I want to save $500 every two months. I also want to meet a goal of $1,500 by mid-year. At the end of the year, I project that I will have saved $3,000 towards my new Lexus coupe.” This is just an example.
- Read and research – Now that you have financial goals, read money magazines. Talking to a financial advisor can help you learn the right way to implement your goals with maximum gains and minimum effort. *This is pertinent with a larger investment.
- Evaluate and re-evaluate – Every couple of months, look at your goals. Have they changed? Are you still on track to meet them by your set deadlines? If not, you can readjust the timeline to account for changes in the economy and your life.
Start young, be financially smart, and know that money in the bank or your 401K company is security for the future. Do not play the game of “I need to show my friends, I am financially able to have the largest house, car, business, or whatever, in the neighborhood.”
With a plan, you are working smarter, not harder to achieve your financial dreams. With a little strategy, you can enjoy a life full of endless possibilities.
