Most financial experts will tell you that in order to get ahead in life and your career, you need to save more money. That's true, but you can make even greater gains (and avoid a lot of the spending guilt) by making more money. If you're going to keep up with 3 percent average inflation and all of the federal, state and local income taxes (not to mention Social Security and health insurance) that eat into your paycheck each month, you want to bring home as much bacon as possible.
Here's how to make the most of your paycheck.
[See: 10 Offbeat Ways to Earn Extra Money .]
1. Make more money at the job you already have. If you are consistently doing your job well, taking on more responsibility, and building on your skillset, then there is no reason why you shouldn't ask for a raise every year or so. But you have to ask for it, and be sure to go into the meeting equipped with success cases and plenty of examples that demonstrate how you have positively impacted the business and culture where you work. Does your employer offer overtime pay or extra pay for "above and beyond" projects? What about spot bonuses, such as small cash bonuses available throughout the year for high-achieving employees? You won't know unless you ask.
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2. Embrace allowances. Ever heard of "over-withholding?" It's when the information you put on your W-4 isn't an accurate portrayal of your true financial picture at tax time . Many of us are guilty of doing this, which means that we're giving the government more of our pay than we need to. Not sure how much you should be withholding? Use the Internal Revenue Service's handy withholding calculator to determine whether you should give your employer an updated W-4 to avoid having too much or too little federal income tax withheld from your pay. Hint: If your job and financial situation haven't changed from last year, you can use last year's information to estimate how this year's withholding will shake out.
3. Health insurance. You should never pay for any service that you're not actually using, be it a gym membership , cable or even health insurance. So, before you sign onto a hefty monthly premium that eats into your paycheck, take the time to evaluate which plan is actually best for you and your family from a medical and financial standpoint. Remember: Your premium is only one expenditure. You should also factor in deductibles, copays and out-of-network costs. If you have a spouse, make sure to compare the plans offered by both of your employers and go with whichever gives you the most bang for your buck. Also, take advantage of any additional health perks your employer might offer, such as savings on gym memberships or incentives for biking to work. These could bring your monthly premium down and increase your take-home pay.
[See: How to Live on $13,000 a Year .]
4. Maximize windfalls. Think of any windfalls you may receive, such as cash or spot bonuses, as part of your salary, and treat them accordingly. Treating yourself to something small as a reward for your hard work is totally legit (maybe a new work bag or nice dinner out) but the rest should go directly to savings or investments. We call it a "bonus" for a reason. It's not free money, it's your money. So, put it to work making even more. No matter where you work, you likely can't depend on a bonus year after year, so squeeze the most out of that money when it comes around and your regular paycheck will be that much fatter.
It's easy to feel like your paycheck disappears almost as soon as it hits your account, whether to cover household bills or living expenses. But if you start thinking of how to maximize that money before it goes out, you'll find yourself with a little extra to spend or save at the end of each month.
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