Building a plan to reach your life goals may feel daunting. But something that may make it a bit easier is having extra money to save toward those goals. Where do you find extra money though? Well, a good place to start is actually at work.
With your job, you are probably focused on how much money you are making. While your salary is important, the less asked, but equally impactful question, is what is your total compensation? Total compensation is made up of salary plus the other benefits from your employer. And those benefits can actually add up to a significant amount of money.
Employer benefits can come in many different forms that could all make a big impact on your financial life. There are a myriad of ways that employers can actually help reduce your financial burdens or give you a boost to cover them more easily.
In this blog post, we are going to highlight some of those benefits so that you can make sure you’re taking full advantage of all your employer has to offer.
Retirement Plan Benefits
Many employers will offer a retirement savings plan where you can put aside money from each paycheck for the future. These savings plans are usually in the form of either a 401(k) or a 403(b) plan depending on the industry you are in.
401(k) plans are most often available in the private sector, while 403(b) plans are most often available to employees in the public or nonprofit sectors.
First and foremost, you should be taking advantage of saving through these plans as it is important to start saving for retirement as early as possible. Plus, your employer may actually offer discounts on the investment options you can choose through the plan in the form of lower investment fees.
Lastly, employers may match your contributions to the plan. This means that they will give you free money just for saving in the plan. Often these “employer matches”, as they are called, are offered based on how much you contribute.
For example, your employer might match 100% of your contributions up to 6%. The translation: If you save 6% of your salary each year, your employer will also put 6% of your salary – for free! – into your retirement savings plan.
So, if you make $100,000 a year, your employer will give you $6,000 extra per year in the form of additional retirement savings. It is almost like you are actually making $106,000 a year!
Make sure you are not leaving that extra money on the table and are at least contributing enough to your retirement savings plan to get the additional money your employer is offering.
Health Plan Benefits
A lesser known plan where employers sometimes also offer a match is within their health plan. Depending on the health insurance coverage you choose, there can be an option that includes a Health Savings Account, or an HSA for short.
Select employers will actually match your contributions to the HSA in a similar manner as they would in a retirement plan. Check to see if your employer offers such a match. If they do, and the health insurance plan with an HSA makes sense for you, make sure you are taking advantage of this additional money from your employer!
It’s also worth noting that an HSA can be a great savings vehicle for health-related expenses, because it is triple tax advantaged. What does this mean? Well, you save on taxes in three ways!
First, any money you put into your HSA is taken out of your paycheck pre-tax. This means that it lowers your taxable income so you can pay slightly less income taxes overall.
Second, if you invest the money in your HSA, you don’t have to pay taxes on the investment returns. Therefore, your money can grow tax free!
Third, you can withdraw your money and not pay any taxes. Unlike most other types of specific savings accounts, like retirement accounts, there are no tax requirements when you withdraw money. The only catch is that you have to use the money for health-related expenses or you will incur penalties.
Companies can sometimes negotiate good deals for their employees with service providers or other businesses. Therefore, make sure to take a look at what your company has to offer.
Travel discounts are common ones that your employer may have available. For example, you may be able to get cheaper rates on airline tickets, hotel packages or transportation. Travel expenses can add up quickly so having discounted rates, even if it’s only a 10% discount, could make an impact on reducing your overall travel costs.
Your employer may also offer discounts on services you use everyday, like your phone bill or your internet package. Getting a break on your essential living costs could make a big impact over the course of a year.
Lastly, check to see if there are any partnerships with stores you frequent. You may be able to get discounts on items you buy a lot and $5 or $10 savings can add up quickly over time. And before you make a big purchase, double check if your workplace offers a discount. You might be surprised at how savings on your purchases can add up.
A great perk to look out for is coverage of education costs, often up to a certain limit. There are actually a variety of educational costs that an employer may cover.
Of course there is the traditional higher education, where an employer may cover all or part of your tuition each semester. There may be requirements associated with receiving that stipend, like a certain GPA that must be maintained, but stipends can go a long way toward making higher education more affordable.
Another type of education that may qualify for a stipend are skill-related courses, such as a course to learn how to code. Employers often want their employees to acquire new skills that can help them on the job and may be supportive of funding the acquisition of those skills.
Lastly, there may be certain certifications within your line of work that your employer will sponsor you to acquire. Employers may help pay both for any testing costs as well as preparation costs like study materials.
If you are considering expanding your skill set through any type of education, make sure to check whether or not your employer offers additional support.
We all know that commuting can get really expensive. Whether it’s paying for parking, gas costs, train or bus passes, the monthly costs to get to work can add up quickly!
Employers usually want to make it as easy as possible for you to get to work and will often have discounts available for transportation. Make sure you are taking advantage of anything your employer offers.
Discounts may come in the form of cheaper public transportation passes or in the form of free parking via permits or vouchers.
Your employer may also be part of a program that lets you pay for transportation pre-tax. Similar to the HSA savings, pre-tax means that money you use for transportation is taken out of your paycheck before taxes and reduces the amount of overall income taxes you pay.
These are just a few of the hidden savings that you may be able to get through your employer. You may be surprised at how much additional money you can save by taking advantage of these benefits and not leaving money on the table! With those extra savings, it may be a little less daunting to build a plan to reach your financial goals.
Are you ready to start making a plan for those additional savings? See how the Lasso app can help you do just that. Join our waitlist and be the first to get notified when the app is live!