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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.

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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, change 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 money
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 returns.

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.

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-- Updated: Feb. 2, 2005
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See Also
Is your salary fair?
Tips for successful salary negotiations
Brazen Careerist Quiz: Is it time to change jobs?
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