No matter how much money you make, you can always use a little more. But the truth is that you aren't always able to increase your income or cut costs. That's when it's time to look into ways to maximize your discretionary income, which is what you have to work with after taxes.
That said, here are some ways to make certain that you're getting the most bang out of your income buck.
Set up direct deposits
Direct deposits can save you money in two ways. First, your bank may waive some fees if you bank electronically. But the real savings comes with control. By putting a percentage of your paycheck into a checking account automatically, you limit the psychological effect of payday and you don't spend every last cent printed on your check as some other guys do.Contribute to your 401(k)
Saving is always good, but 401(k) saving is even better. First, you get to put the money away before taxes, so you lower your tax liability. But better than that, a lot of companies match employee 401(k) contributions, which means you get to literally double your money (up to a preset limit).Roll over your retirement money if changing jobs
You don't have to take your 401(k) with you when you leave your job, but there's really no good reason to leave it there. You have two options: either have the account transferred to your new employer or to an individual retirement account (IRA). The goal here is to bundle your funds (although the investment should remain diverse) because interest grows based on the total principal (meaning that the bigger the principal, the more interest you should earn). Just make sure that the transfer doesn't go through you, but rather directly to the new account manager, to avoid tax liability.Take advantage of company benefits
Benefits can be one of the best ways to stretch your salary. A company with a strong health plan that offers a low co-pay can more than make up for a lower salary. Some companies have employee-dining plans that allow you to eat subsidized meals. Other companies offer life insurance to employees at reduced rates, while some public companies make their stock available to employees at reduced rates. The thing to remember is that there's more to salary than straight dollars and cents; sometimes a lower paying job with great benefits can make you more money in the end.Keep saving 10% to 15%
A lot of guys don't save at all, which is a mistake. But some guys who save also make a mistake: they put away the same amount every month no matter how much they make. Experts say that you should try to save between 10% and 15% of your income, which means that as your salary rises, so too should your contribution to your savings account.Reevaluate your plan contribution
As market conditions change, so too should your 401(k) plan contribution. Since you're not going to get access to this money for years or possibly decades, you should be looking for slow, steady growth. In other words, you don't want a large chunk of your money tied up in any one sector. Stay on top of your investments by getting quarterly investment reports from the plan administrator and move with an eye toward diversity.ask yourself this:
Are there better days for you to receive your paycheck?The answer to this requires a personal point of reference, so it pays to know yourself. If you're a party guy, it's probably better to receive your paycheck on a Monday rather than a Friday. Yes, you'll still party, but knowing that you won't get your money until after the weekend should make you less tempted to overspend.
make your money work
It's easy to say that the next raise will take care of all of your financial worries. But that's seldom the case.Financial concerns, or rather avoiding them, have more to do with managing your salary than with the total paycheck. A sound strategy will help you manage your current situation and put you in a position to take advantage of your next raise.
Resources:
http://www.bankrate.com/brm/news/advice/20040514a1.asp
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