You want to start making a 401k account contribution. You know that a 401k account is a good thing. You know that contributing to a 401k account is the right thing to do. You also know that social security will not be there for you when you retire; so you will have to completely depend upon your own investments at retirement.
But even though you know all that; you delay pulling the trigger. You’ve heard financial planners preach and preach about starting early; but you still delay pulling the trigger. You delay turning in your 401k enrollment forms. Your delay could stem from your doubts about affordability. You’re not sure you can afford a 401k contribution every month. You can’t seem to find any extra money.
But with all that you know about the future, can you afford not to. If you don’t have enough money now while you are working, what will you do when you are retired, not working, and didn’t save enough?
Financial planners say that the best time to start investing for your retirement was yesterday. But if it feels like you are living from pay check to pay check, where can you find the money to start making a 401k contribution? Let’s look:
Helping You Afford Your 401k Contribution
#1 – Pay Yourself First
Make your 401k contribution before paying anything else. If you pay yourself first you will not have to always go looking for that extra money. And it does not have to be a large amount to produce results…small amounts do add up.
#2 – Automatic Investing
Make your 401k contribution automatic. Work with your payroll department to set up your contribution as an automatic withdrawal from your paycheck. Once your contributions are made under this automatic system, you will not even miss the money.
#3 – Bonus, Raises, Tax Refunds
Before you received your bonus, raise or tax refund you were living without that extra money, right? So after you receive that extra money, keep living within the same budget. Use that extra money to make your 401k contribution.
#4 – Employer Matching
Use the power of the employer match. If your employer matches your contribution you are getting free money. Can you afford to not get free money. Just contribute enough to get the full employer match; this is a very common practice.
#5 – Compounding
Take advantage of the power of compounding. The higher your 401k account balance is, the more compounding will work for you because growth comes from growth. Compounding grows your account without your help. That’s why it’s referred to in the industry as the “magic of compounding”.
#6 – Live Below Your Means
By spending less than what you earn you will have extra money to make your 401k contributions. Make it habit to have some extra money from every paycheck. Then make it a habit to invest that extra money, not spend it.
Your 401k contributions do not have to be large dollar amounts. There is such a misconception about the size of a 401k contribution. Many people think that for a 401k contribution to produce results it has to be a large dollar amount. Small contributions produce results too. It all adds up.
Just remember, the only investments that will be there when you get there to retirement is what you sent ahead. Start investing today; the best time to start saving for your retirement was yesterday; the second best time is today….get started.
