5 Painless Ways to Achieve Financial Security

4/27/2017 - By Elizabeth S. Varhalla, CPA

We all know that it's never too early to start planning for retirement or to start building a nest egg for future expenses. Financial security is a goal that we all have in mind, but are you taking advantage of the easy opportunities that can help you accelerate the process? Other than utilizing sensible spending habits, here are some quick strategies to help you reach financial security sooner than you think.

  1. Maximize 401K matching offered by your employer. Not only are your contributions tax deferred, but so is the matching amount contributed by your employer. At a minimum, contribute enough of your salary to your 401K to take full advantage of the maximum match offered.

  2. Automatically deposit part of your paycheck into a savings account. Designate a set amount from each paycheck to be deposited into your savings account and don't touch this money. Learn to live on the amount deposited into your checking account only. Preparing a budget will help you to allocate your take home pay appropriately and to monitor your spending.

  3. Use your employer offered Cafeteria Plan. If your employer offers a cafeteria plan, by all means run your health insurance premiums and other benefits through the plan. These deductions will reduce your taxable income, resulting in more take home pay for you, plus a lower tax liability when taxes are due.

  4. Open a credit card account with a financial institution that offers cash back on purchases. Cash back is free money! It is important that you only charge what you can afford to pay off the next month. If you pay off your balance each month you will not incur any interest charges, plus you get a nice bonus when your cash back is posted to your account.

  5. Contribute to an IRA. In 2017, you can contribute up to $5500 ($6500 if you are over 50) to a traditional or Roth IRA. A traditional IRA contribution may be tax deductible, saving current tax dollars and deferring taxes on the growth of the IRA until you take distributions at retirement. A Roth IRA is not deductible, but you receive the benefit of tax free withdrawals in your retirement years. Consult one of our tax advisors or IRS.gov to determine IRA contribution rules and limits.

The bottom line is that taking advantage of these five ways to save money is a no brainer! The road to financial security is paved with opportunity and discipline. Contact a member of our Tax Consulting or Investment Management teams if you have any questions, or call us at (800) 477-7458 for more information.

About the Author | Beth Varhalla, CPA

Beth is a senior manager in the Tax & Accounting Services Department of Saltmarsh, Cleaveland & Gund. Beth joined Saltmarsh in 1987 and her areas of experience include individual, corporate, and partnership tax services, along with financial accounting and QuickBooks services. Areas of specialization include law firms and healthcare companies.

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