How to Get Free Money – The Employer Match

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Flying high on a sweet company match!

Ready for a way to get free money today? This isn’t a scam! It’s just being smart with your money.

Have you set up a retirement 401k or IRA with your work already? If you haven’t, this would be the first step. You can typically reach out to your HR department to get started with this. If you have done that already, well done, you are headed in the right direction. It is usually very easy to enroll in your company-sponsored retirement account, and I can’t stress to you how important it is to take this step. The magic of compounding interest over the course of your working career is crazy!

The way to get free money, legitimately, from your employer is to take advantage of the company match (if it is offered). My most recent job included a 100% company match up to 4% of what I contributed. This means that if I made $50,000 a year (this is just for an example), and I contributed 4% of my annual paycheck, which would be $2,000 that I would contribute to my retirement each year. With that match though, my company would throw in an additional $2,000 to match the $2,000 I had put down. Without hardly lifting a finger, my retirement savings have already doubled! That is free money if have ever heard of it!

One of the tough things about getting out of debt is knowing when and where to cut back or contribute to your savings, spending, retirement contributions, and other financial goals you may have. Unless you  are completely strapped for cash on a paycheck to paycheck basis, the minimum you should be contributing to your retirement account at work is whatever it takes to max out your company’s match. If they match  4%, I’d recommend contributing at least 4%. If they match 8%, first pinch yourself because that is a great deal, and then contribute at least 8% yourself.

While it is easy to think that you will be able to save more tomorrow, there really is no time like the present. Here is a quick example of what your retirement account would hold if you put in $1,000 at the age of 25, 35, and 45, and retired at 65. This is assuming you made no other contributions, and earned a conservative 8% on your investments:

Age 45 – 65 (20 years): $4,926

Age 35 – 65 (30 years): $10,935

Age 25 – 65 (40 years): $24,273

Pretty crazy how much the age you start at has such a huge bearing on how much your money can grow. Sure, you may have more disposable income as you get older and further along into your career, but without compound interest working as hard in your favor, catching up is extremely difficult, and sometimes impossible to do.

If your company offers a match of any sort on your retirement account contributions, take it seriously and think about how much your future self will thank you!

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