So you get a new job. You are (hopefully) offered more money.
Once you receive an offer what should you do first with FI as a consideration?
Consider asking yourself the following questions.
Does your new employer offer a 401k? If so, do they match your contributions? How much? So much can be said about 401ks but one thing almost all personal finance experts agree on is that you should contribute at least enough to get the company match. Any match from the company is a 100% return on your investment.
There is also an argument that you should max out your 401k. “Maxing out” means contributing the maximum allowable amount to your account for a given year. Per the IRS, the contribution limit for 2017 is $18,000. By maxing out your 401k, you lower your tax burden for the year because contributions to a traditional 401k are pre-tax.
Health Savings Account
Does your employer offer high-deductible health plans as one of its health insurance options? If so, you may be eligible to open a health savings account (HSA). I could go into all of the benefits here but the Mad Fientist does a much better job on his site here. One of the key points to keep in mind is how much you plan to actually use your health insurance benefits. If you or someone on your insurance have a lot of medical costs, it may make more sense to go with a health insurance plan that does not have high deductibles even though you will not be able to contribute to an HSA.
It’s also a good idea to check if your employer either matches your contributions to an HSA or will contribute a set amount to your HSA once a year. My current employer matches HSA contributions up to $750 and my spouse’s employer contributes $500 to his account irrespective of his own contributions!
Much more can be said about workplace benefits and FI but I hope the biggest takeaway you have from this article is that as a new employee, you should always review your benefits package carefully to ensure you take advantage of all employer-provided benefits that will enhance you and your family’s wellbeing, financial or otherwise.