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.
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.
6. Diagnose the best health coverage
Make time to go over your coverage to guarantee that you get the medical benefits you want for the least amount of money. If you're married, don't forget about your spouse's coverage. By comparing each of your company plans, you can decide whether it's more cost-effective for you each to carry separate health care or to combine coverage under one employer plan.
"People often don't take the time to go to their company's Web site or read the company's benefit materials item by item to understand their benefit options," says Karin Maloney Stifler, a certified financial planner with True Wealth Advisors LLC in Hudson, Ohio. "This can be a good way to maximize benefits and salary."
7. Dine at your company's cafeteria plan of benefits
In addition to the more-basic employee benefits, many companies offer programs so that workers can establish accounts with pretax dollars to cover uninsured health care expenses, dependent care costs and even the price of commuting. These can save you big since you're paying with money before the Internal Revenue Service gets its cut. If your company doesn't offer such benefits, lobby for them.
"This is a no-brainer," says Mitchell Freedman, CPA and personal financial specialist with MFAC Financial Advisors Inc. in Sherman Oaks, Calif. "It's not hard or costly for companies to set up such programs, so even if your employer is small, urge your company to do this."
8. Examine all your potential company benefits
Some valuable benefits also might be hidden deep within your employee manual.
Does your company offer life insurance? What about options to purchase disability or other forms or insurance at lower-cost group rates? Maybe the company offers tuition reimbursement, which could help you get the training necessary to demand a bigger pay raise next time around.
Some public companies sell their stock to employees at a discounted price. The practice builds in a profit for the employee shareholder and provides the worker with another investment vehicle. "You can buy common stock of your own company very often at a discount and with no commission," Stifler says. "It's better than buying it off the street."
7. Dine at your company's cafeteria plan of benefits
In addition to the more-basic employee benefits, many companies offer programs so that workers can establish accounts with pretax dollars to cover uninsured health care expenses, dependent care costs and even the price of commuting. These can save you big since you're paying with money before the Internal Revenue Service gets its cut. If your company doesn't offer such benefits, lobby for them.
"This is a no-brainer," says Mitchell Freedman, CPA and personal financial specialist with MFAC Financial Advisors Inc. in Sherman Oaks, Calif. "It's not hard or costly for companies to set up such programs, so even if your employer is small, urge your company to do this."
8. Examine all your potential company benefits
Some valuable benefits also might be hidden deep within your employee manual.
Does your company offer life insurance? What about options to purchase disability or other forms or insurance at lower-cost group rates? Maybe the company offers tuition reimbursement, which could help you get the training necessary to demand a bigger pay raise next time around.
Some public companies sell their stock to employees at a discounted price. The practice builds in a profit for the employee shareholder and provides the worker with another investment vehicle. "You can buy common stock of your own company very often at a discount and with no commission," Stifler says. "It's better than buying it off the street."
9. Refuse allowances
Companies often provide car allowances to employees who frequently travel. "I recommend that they ask to be given reimbursement for their actual auto expenses instead," Freedman says. "The reason is that the car allowance is added to their income and is, therefore, subject to tax, whereas reimbursement is not."
10. Make sure your savings keep pace
Your boss finally signed off on your raise! Now don't waste a penny of it.
Financial planner Stifler recommends that when your salary increases, bump up your savings, too. If you get a 3 percent raise, she says, increase your 401(k) contributions by the same percentage.
If you make this savings move as soon as your raise is effective, the transition should be relatively painless. Remember tip No. 1? It's always easier to sock away money before you get used to having the extra cash to spend. And the sooner you add more to your retirement plan, the bigger the eventual payout will be.
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.
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.
6. Diagnose the best health coverage
Make time to go over your coverage to guarantee that you get the medical benefits you want for the least amount of money. If you're married, don't forget about your spouse's coverage. By comparing each of your company plans, you can decide whether it's more cost-effective for you each to carry separate health care or to combine coverage under one employer plan.
"People often don't take the time to go to their company's Web site or read the company's benefit materials item by item to understand their benefit options," says Karin Maloney Stifler, a certified financial planner with True Wealth Advisors LLC in Hudson, Ohio. "This can be a good way to maximize benefits and salary."
7. Dine at your company's cafeteria plan of benefits
In addition to the more-basic employee benefits, many companies offer programs so that workers can establish accounts with pretax dollars to cover uninsured health care expenses, dependent care costs and even the price of commuting. These can save you big since you're paying with money before the Internal Revenue Service gets its cut. If your company doesn't offer such benefits, lobby for them.
"This is a no-brainer," says Mitchell Freedman, CPA and personal financial specialist with MFAC Financial Advisors Inc. in Sherman Oaks, Calif. "It's not hard or costly for companies to set up such programs, so even if your employer is small, urge your company to do this."
8. Examine all your potential company benefits
Some valuable benefits also might be hidden deep within your employee manual.
Does your company offer life insurance? What about options to purchase disability or other forms or insurance at lower-cost group rates? Maybe the company offers tuition reimbursement, which could help you get the training necessary to demand a bigger pay raise next time around.
Some public companies sell their stock to employees at a discounted price. The practice builds in a profit for the employee shareholder and provides the worker with another investment vehicle. "You can buy common stock of your own company very often at a discount and with no commission," Stifler says. "It's better than buying it off the street."
7. Dine at your company's cafeteria plan of benefits
In addition to the more-basic employee benefits, many companies offer programs so that workers can establish accounts with pretax dollars to cover uninsured health care expenses, dependent care costs and even the price of commuting. These can save you big since you're paying with money before the Internal Revenue Service gets its cut. If your company doesn't offer such benefits, lobby for them.
"This is a no-brainer," says Mitchell Freedman, CPA and personal financial specialist with MFAC Financial Advisors Inc. in Sherman Oaks, Calif. "It's not hard or costly for companies to set up such programs, so even if your employer is small, urge your company to do this."
8. Examine all your potential company benefits
Some valuable benefits also might be hidden deep within your employee manual.
Does your company offer life insurance? What about options to purchase disability or other forms or insurance at lower-cost group rates? Maybe the company offers tuition reimbursement, which could help you get the training necessary to demand a bigger pay raise next time around.
Some public companies sell their stock to employees at a discounted price. The practice builds in a profit for the employee shareholder and provides the worker with another investment vehicle. "You can buy common stock of your own company very often at a discount and with no commission," Stifler says. "It's better than buying it off the street."
9. Refuse allowances
Companies often provide car allowances to employees who frequently travel. "I recommend that they ask to be given reimbursement for their actual auto expenses instead," Freedman says. "The reason is that the car allowance is added to their income and is, therefore, subject to tax, whereas reimbursement is not."
10. Make sure your savings keep pace
Your boss finally signed off on your raise! Now don't waste a penny of it.
Financial planner Stifler recommends that when your salary increases, bump up your savings, too. If you get a 3 percent raise, she says, increase your 401(k) contributions by the same percentage.
If you make this savings move as soon as your raise is effective, the transition should be relatively painless. Remember tip No. 1? It's always easier to sock away money before you get used to having the extra cash to spend. And the sooner you add more to your retirement plan, the bigger the eventual payout will be.
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