Top Ten Reasons to Participate in Your Company Retirement Plan

Now that tax season is over, folks are taking a look at their bigger financial picture again.  With all deference to fabulous late night talk shows, here are ten reasons to consider putting some of your hard earned wages into an account with your employer’s retirement plan.

10. The company is required to provide a variety of investment choices and access to information about those investments.

9.  You’ll save taxes on the money you put in the plan now and you’ll probably be in a lower tax bracket when you take the money out after you retire.

8.  Forced savings – if you don’t get it in your pay check now, you don’t spend it now.

7.  It keeps you from trying to time the market.  The money gets invested every month. 

6.  The balances you have in retirement accounts don’t usually count against your kids’ ability to qualify for student financial aid.

5.  Many companies contribute some money to your account if you contribute.

4.  Lots of retirement plans allow you to borrow against your account if you need to. 

3.  If you want to “buy low” in the market, this certainly seems like the time to do it!

2.  You can brag to your friends at parties about your investment portfolio.

1.  You’re putting away money for retirement.  When you’re old and grey, you’re less likely to have to go to work and ask strangers, “Do you want fries with that?”




Saving 10%

First, get your cash flow under control.  Whatever your income is –  before taxes and other deductions –  save 10% of that amount from every paycheck.  There are lots of different places to put the money that you save.  In fact, the other Fundamentals of Fiscal Fitness fold right into this one.  Whatever it is that you’re able to earn, learn to live on less than you make.  And saving 10% is a good way to make sure you’re doing that.  If you’re just starting your financial life, this saving habit will allow you to reach important financial goals and be financially sound.  If you’re later in your financial life, this saving habit will lessen the likelihood that you’ll run out of money.  So work out a spending plan that allows you to pay taxes and all your other expenses with no more than 90% of what you make. 


Fiscal Fitness

There are some basics concepts that just about everyone should live with in terms of the finances.  These ideas as I’ll put them forth here are part of the philosophy of the Alliance of Cambridge Advisors.  (If you’re looking for an ethical capable financial advisor in your area, is a great place to look.) 

The Five Fundamentals of Fiscal Fitness are:

         Saving 10%

         Sufficient Liquidity

         Fund Pensions

         Having a Right Size House

         Controlling Consumer Debt

Over the next few postings, I’ll give you my version of these concepts and how the average person can apply them in their life. 

Naughty or Nice

In flipping channels the other night I saw an entertainment show report that they’d surveyed some children to find out who would top Santa’s list of Naughty Folks.  Britney Spears and Paris Hilton were at the top.  Everyone makes mistakes and a trusted mentor once said to me, “Feel free to learn from the mistakes of others.  Don’t feel you have to have to make them all yourself.”  So rather than harp on these already over-harped-on celebs, let’s look at a few lessons we can all learn from their over publicized errors.

         Know how much you spend and be sure it’s less than you make.  No matter how large your income, expenses will grow to exceed that amount if you don’t watch out.  So be sure that you save 10% of everything that comes in, keep some extra in reserve for taxes and emergencies, and cut back your lifestyle until you can live on the rest.

         Money can’t solve all problems – especially if a courtroom is involved.  Excellent legal representation is still going to be stuck with the facts of a case and the law that governs.  And sometimes that means that a judge or jury might nor rule the way you might want them to.  (That goes for legal issues other than driving infractions and child custody.)  

         The friends and attention that money can bring are sometimes very fickle.  Some of the people who support you when you’re on top are either not to be found or they’re the ones to throw the first stone when you’re down.  The solution to this is often being a little less public about having money.  Sad, but true.

In the spirit of the season, let’s all give a clean slate to all the folks who’ve had their mistakes and mishaps make big news in 2007 and wish them well in 2008. 

Holiday Financial Compromises

The spirit of giving during the holidays can sometimes get out of control and have you giving more than you can afford.  There are some shopping and giving strategies that can maximize your generosity without overdoing it financially.

1 – Make a list of everyone you want to give to, the maximum you’d like to spend on that person, and two or three gift ideas in that price range. 

2 – Look online and in the newspaper for where your target gift items are.  Make a note if it looks like they’re on sale at a particular store.

3 – Don’t go shopping without your list.  Check off each person as you’ve got them covered.

4 – If you have time to make some items, do that.  Lots of people love baked goods and personally made crafts.

5 – Consider some “personal service” gift certificates.  For instance, give someone a gift certificate for a home cooked dinner, being their valet for a week (picking up dry cleaning, shopping, etc.), or fixing some items in their home. 

The people you love and want to give gifts to during the holidays don’t want you putting yourself in financial hard times.  Don’t let yourself slip into that holiday trap.