Some employers still offer a 401(k) retirement plan to employees as an employment benefit, and some employers even match an employee’s contributions. This a smart way to invest in your retirement by receiving a pre-tax deduction of the amount of your contribution plus the added bonus of having your employer match. However, even with these positive benefits, some employees still don’t contribute to their 401(k) plan because they believe that they can’t afford to because they’re paying down their credit card debt each month for past purchases.
If you’re paying an outstanding balance on your credit cards each month, then stop and think about this. Why lose out on the valuable tax and savings benefits of contributing to your 401(k) plan plus having an employer match to build retirement savings for your future? A better way would be to do both – fund your 401(k) plan and also pay off your credit card balance. You may need to review your monthly spending plan carefully to look for ways to reduce expenses to free up funds available to put into your 401(k). It may not seem that you can contribute that much right now, but remember, a little is always better than nothing. Then, after your credit card debt balance is paid off, you can gradually increase your monthly 401(k) contributions.
If you have any questions about contributing to your 401(k) account, paying off your credit card debts, or looking for ways to free up more money each month in your monthly spending plan, please contact our office today.
TAMPA BAY MONEY TIPS are published to provide practical personal financial tips relating to budgeting, saving, spending, debt, credit, financial wellness, planning for the future, and other personal finance topics. Linda A. Stortz, CPA, P.A. is a local CPA firm located in the Tampa Bay, Florida area and is dedicated to educating individuals to take control of their personal finances and financial future. Services provided include confidential personal financial coaching, counseling, mentoring, and also financial education through financial literacy and wellness seminars. Linda A. Stortz is a CPA. Accredited Financial Counselor, and Certified Identity Theft Risk Management Specialist. For more information, please e-mail Linda at Linda@LStortzCPA.com.
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