10 ways to maximize your salary
Are you tired of waiting for your boss to come through
with your much-deserved raise? You have two choices: Change jobs
or make the most of the money you're making.
If you're convinced the salary hike is in the works,
there are ways to cope until the extra cash shows up. These 10 tips
can help you maximize your current 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.
Don't stop with the salary direct deposit. When you
set that up, also arrange to have a part of your check go automatically
into a savings account or other investment option to build an emergency
fund. "Direct deposit into an investment vehicle will help
you save," says Peter Lengsfeld, a senior financial consultant
and certified financial planner with Presidential Brokerage Inc.,
Greenwood Village, Colo.
2. Manage your payroll withholding
To ensure that you're sending the correct amount of money directly
into your bank account, double-check your payroll withholding. Have
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 whopper of a
tax bill at the end of the year.
If your circumstances change during the year, for
example your spouse gets a raise or your oldest child moves out,
your withholding accordingly.
And don't just drop off the change paperwork and forget
about it; make sure the changes show up on your next paycheck. It
pays to do this, says Christopher Krell, a certified financial planner
with Cassaday & Company in McLean, Va., because company accountants
have been known to make mistakes.
3. Contribute to your 401(k)
Sign up for your company-sponsored retirement plan and sock 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.
"You're literally walking past money on the ground
and not picking it up if you don't participate," says Krell.
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. For example, if you're
putting 50 percent of your contributions into a high-tech stock
fund, you're taking on extraordinary risk since that sector frequently
takes big nose-dives. 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, says Lengsfeld, and look at them to
help you maximize your investments.
5. When changing jobs, roll over your retirement
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. Bundling money into one retirement fund can help increase
Just make sure any transfer is done company-to-company
(or company-to-IRA trustee). That way you avoid having early distribution
taxes taken out of the account.