Five Painless Ways to Achieve Financial Security

2/23/2015 - By Beth 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 allocate your take home pay appropriately and monitor 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 on April 15th.

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 2015, you can contribute up to $5500 ($6500 if you are over 50) to a traditional or Roth IRA. A traditional IRA contribution may be fully tax deductible, saving current tax dollars and deferring taxes until you take distributions at retirement. A Roth IRA is not deductible on your current tax return, but is a great vehicle to receive tax free income in your retirement years.

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. These methods are a great way to start paving the road to a successful life.

Beth Varhalla, CPA, Tax and Accounting Services Senior Manager. With over 25 years of industry experience, Beth specializes in providing services for our healthcare and law firm clients.