For the longest time, I was not satisfied with my job. My clients were demanding and unreasonable at times, the hours were irregular, and I wasn’t passionate about the work.
On the plus side, I was paid very well and the benefits were incredible. There were so many ways my job made my family happy, healthy and wealthy. Unfortunately, my distaste for a career I had been in for 15 years clouded my ability to see the positive side.
I didn’t quite have this epiphany about how good I had it until I left my job earlier this year to pursue my small business full-time. Yes, during the year of a global pandemic I decided to make the solopreneurship leap!
Truly, I have no regrets and my first year of business has been great despite the circumstances. But I’d be lying if I didn’t recognize the true wealth-building options my employers (and maybe your employers too) offered me.
Here are seven ways my employers helped me to build my family’s wealth.
My most recent employer had a 401k match of 15% of my annual contributions. So when I maxed out my 401k contributions in 2019 at $19,000, I received $2,850 in free money.
I don’t know about you, but free money is most definitely my favorite kind of money. Through maxing out contributions and receiving our company match for seven years, my 401k balance when I left my company was around $200,000.
If your employer has a 401k match, consider taking advantage of it.
Read More: How Does 401k Matching Work?
When I left my job earlier this year, I was able to find health insurance coverage for my family of 4 for around $1,200 per month. This was a high deductible health plan, and it was very similar to the coverage I had with my previous employer.
Given that my employer paid all of my monthly premiums before, $1,200 was quite a shock to our family budget. We made it work, but I immediately became grateful for the 15 years I had little to no payments on my monthly health care premiums.
Health Savings Account (HSA)
Some employers offer a Health Savings Account (HSA) with their high deductible health plans. My employer did not, but I was able to sign up for one outside of our company benefits plan.
The HSA allows you to save and invest for future health care expenses pre-tax or with tax deductible contributions. With medical issues being one the top reasons for bankruptcy in the U.S., setting aside money in a tax efficient manner to cover health care costs could be one of the best ways to build wealth.
Benefits are fantastic, but we can’t forget the good old income that comes from being employed.
Every other week, a new direct deposit would happen like clockwork for me. With entrepreneurship, I have to constantly hunt for new money. And sometimes, I have to chase down the clients I’ve already done work for to pay me!
Having that steady and reliable paycheck is something that you can count on when it comes to your family’s financial goals.
Raises, Bonuses and Commissions
During my W-2 years, I was lucky enough to receive a handful of substantial raises, bonuses and commissions. These moments were pivotal in our journey to build our family’s wealth.
It was a time where we had to combat “lifestyle inflation” and choose to create more wealth instead of just buying more stuff. Of course, we enjoyed more, but we also left more for investing, saving and eliminating our debt. By doing this, we allowed ourselves to enjoy life today and tomorrow.
If you are working hard and are able to receive a raise, bonus or commission in the near future, check in with yourself and ask some key questions:
- Could I increase my retirement contributions more?
- Will this newfound money allow me to save up for a larger down payment on our home?
- Can I use this cash to eliminate my high interest credit card debt once and for all?
Questions like these may help you to create more freedom and options than you ever imagined possible.
I’m not about deprivation on your wealth-building journey though. Make sure you have some fun with your increased income too. Life is for living.
Find a percentage that works best for you and your family and run with it.
Dependent Care FSA
With two kids at home, we’ve shelled out quite a bit for daycare, camps and pre-school tuition. It’s a good investment for us. We have to keep the little humans happy, healthy and learning!
An employer benefit that can help out a lot with these costs is the Dependent Care FSA. It is essentially a separate account where you can save pre-tax money for use on qualified expenses. In this case, those qualified expenses would be things like daycare, camps and pre-school.
For example, if I spent $5,000 on those types of expenses annually and I was in the 22% tax bracket, I could roughly expect to see an $1,100 savings each year. That type of savings really adds up over time!
Employee Profit Sharing
A profit sharing plan can be a great way for employers to give back to their employees for quality performance. When the employer does well, so do the employees. It makes sense!
My last employer offered employees 15% of our annual salary in company stock after a certain number of years. The balance in my account grew consistently as our company performance grew. It was a nice way to motivate me to hit my goals!
If your company offers this benefit, meet with your HR rep to learn more. Or if you’re hunting for a new gig, ask if this is a benefit offered. It’s a smart way to build wealth, but make sure it’s not the only way you’re investing for your future. Keep diversification in mind as you plan out your portfolio.
Next Steps for You
Outside of these seven ways your employer can make you wealthy, there are dozens of benefits that you can explore and take advantage of — including dental insurance, vision coverage, long-term disability, parental leave, paid time off, reimbursed expenses and so much more. When you’re stressing less about money, you can focus on the more important things in life.
One way to keep track of your overall financial life is by using free, online financial tools like Personal Capital’s. Millions of households use this technology to get a better understanding of how their money is spent, saved, and working for them. With the free tools, you can:
- Plan for retirement given a wide range of scenarios
- Budget and save for your short-term and long-term goals
- Analyze your investments and uncover hidden fees
In the spirit of maximizing your money, I recommend taking advantage of what your employer has to offer in order to create more options and freedom for your family today. I’m definitely glad I did.
Personal Capital compensates Andy Hill (“Author”) for providing the content contained in this blog post.