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Make sure you are taking advantage of all savings and investment opportunities
With January already behind us, hopefully you have paid off the holiday credit card spending and can focus on increased saving and planning for the future - the long-term future, not just the next holiday spending cycle.
Now is a great time to review your paycheck to ensure you are maximizing deductions for retirement plans. If your employer offers a 401(k) plan, check to see what they contribute automatically or what their matching policy is. Either way, take advantage of this benefit to the fullest extent possible. Meaning, deduct as much as you can, up to the annual limit. For budgeting purposes, it is ideal to think of this as a mandatory 'expense' before discretionary items as opposed to just contributing whatever is left over after all your monthly spending.
Another potential savings opportunity is through a health savings account (read Hooray for HSAs). HSAs are available to those with a qualifying high-deductible insurance plan. Even without an employer contribution, these are great vehicles to use for medical expenses. They are very tax efficient and there is no annual spending requirement, so it is an excellent way for younger workers to build a cushion for the future.
Below are some contribution limits for 2024 for select popular accounts. This is by no means an exhaustive list of options available. Please consult a financial advisor and/or accountant to better understand how to optimize your savings.
Contribution Limits - select accounts
Source: IRS; Jackson Creek Investment Advisors
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