Day 1 of a new
Job: Orientation.
You sit there with
binders and packets as HR shuffles through 401(k), Insurance Plans, and
other standard policies. If this is your
first job, you can feel like a deer in the headlights. What does all this mean? How does it affect
you financially? No time to zone out.
These standard Benefit Packages with affect you financially. Take time to understand what your company
offers besides your paycheck.
401K
If your company
offers retirement matching for 401(k) or
Roth 401(k) this is a no-brainer for savings.
Always contribute
enough to get the maximum match. Say your employer matches 50% of a 6%
contribution. That means if you contribute 6% of your salary, your company will
throw in half of that amount. If you are young and your budget can afford it,
max out your 401(k). Your future self will thank you.
There are 4 things
to look for when picking funds:
- Better-than-average returns:
A fund, if it's worth your while, should have performed in the top half,
and ideally the top 25%, of its peer group over a three-, five-, and
10-year time span.
- Low price: A fund's expense
ratio -- what you are charged annually and what will lower your overall
return -- should not exceed the average among the fund's peers.
- Solid management: If you're
opting for an actively managed fund (as opposed to an index fund), the
manager should have a solid track record of experience.
- Reasonable size: Sometimes
when a fund becomes too popular, its asset base -- the dollars invested in
the fund -- gets bloated. That means the manager can't move in and out of
a stock too quickly without moving the market.
- In picking the right funds
for your portfolio, make sure you diversify your investments. That means
don't over-invest in any one sector such as technology or in any one
investment style such as growth stocks or value stocks.
Employee Stock Purchase Plans
Additional
compensation methods for Publicly traded companies is to offer an option to buy
company stocks at a discounted rate at set intervals of the year. You elect to
have a certain dollar amount removed from your paycheck each period to go
toward buying company shares. If shares
for your company stock are trading at 50.00 and your ESPP is at a 10% discount,
your ESPP will buy them at $45.00. While ESPP are a great way to own discounted
stocks, don't put all your eggs in one basket. Remember diversification is the
key to consistent portfolio growth
Flexible Spending Accounts
A Flexible Spending
Account (also known as a flexible spending arrangement, FSA ) is a special
account you put money into that you use to pay for certain out-of-pocket health
care costs. The money contributed to your FSA is set aside before taxes are deducted,
so in most cases you save about 30% on your Federal taxes. The average tax
savings for a person earning $50,000 who contributes $2,000 into an FSA account
is approximately $600. That means you get $2,000 worth of health care
purchasing power PLUS pay about $600 LESS in Federal taxes.
You can use funds in
your FSA to pay for certain medical and dental expenses, including copayments
and deductibles.
FSAs are available
only with job-based health plans. You can put up to $2500 into an FSA each
year. You generally must use that money within the plan year. But your employer
may offer a grace period or carry over
Even if you are
Young, Single, and Healthy it's smart to have some money in your FSA because it
can be used on a wide variety of Health items like glasses, allergy medications
(with prescription) or contact lens solution.
Find out what is elligible here:
Wellness Services
Companies are
starting to realize Healthy Employees are More Productive Employees. Heath
reimbursements are being added to encourage employees to workout and eat right.
Check to see if your job offers gym or weight watcher reimbursements. Always
know what your health plan has to offer. Use the free Wellness Checkup or Free
Flu Shot. Being healthy save YOU Money.
Employee Discount
Programs
Your average size
company should be part of some discount program. Whether it is a 3rd party
group discount site like
www.corporateperks.com,
or discounts with local businesses. Ask
your HR Representative if your company participates in discount programs and
which ones. Employee discount programs
offer deals on goods and activities. A family of 4 headed to Six Flags can save
close to $100.00 on tickets and parking.
When your shopping around for deals on items you plan on purchasing,
remember to check out your companies discount program
Employee Referral Program
More employees are
hired through reference than Resume Submittal Programs. Use your networking
skills and begin to refer your talented friends to open positions in the
company. If you work for a large company, peruse the Hiring Portal to see what
jobs are open. Each employee referral that results in a new hire can net
you a couple hundred to thousands dollars . ( Unfortunately these payments are
considered Bonuses and are subject to higher taxes..but hey...more money is
more money)
