401k Plan Riches and the Employer Match!
Image sourced by Jakub Żerdzicki @jakubzerdzicki
Wouldn’t you know it. . .
Soon after we launched the blog post “How to Double Your Money Guaranteed!” our old friend Flamboyant Freddie wrote to us, dinging us for publishing such a basic personal finance and wealth-building tip.
He commented that, “After all, everyone under the sun knows this time-tested, wealth-building technique. So why clog up cyberspace with this drivel.”
The Budget and Grow Rich® team calls Flamboyant Freddie, Foolish Freddie.
Because in our experience and based on our financial research, slow and steady wins the race. People that have a closed-minded and know-it-all attitude typically shut out new ideas and information – ways to improve. In our case, moneysaving and wealth-building strategies, techniques, tips and tactics.
In case you missed the post, we explained how to double your money by making contributions to your 401(k) plan or 403(b) plan – retirement plans – to capture your employer’s matching contribution.
We compared this proven wealth-building technique – contributing money into your 401k and 403b retirement plan to investing in start-up companies, early stage companies and venture capital companies – which are relatively risky as compared to contributing money into your 401k plan or 403b plan – retirement plans.
Especially when your employer matches part of your contribution. The employer match is Free Money!
Let’s contrast Flamboyant Freddie’s rant with Annie from Anchorage. . .
Annie wrote in too we’re happy to report:
“Thank you Arthur and The Budgeting and Grow Rich® Team for sharing so many valuable and practical moneysaving and wealth-building techniques. We benefit every week.
Your recent post about the employer match was very helpful and insightful. Your post finally got us moving to enroll in our company’s 401(k) plan, take advantage of the employer match and start building wealth for retirement.
We were aware of the employer match but never really considered the power of capturing the employer match. Your post pointed out that it’s Free Money.
Somehow, my husband and I just never got around to enrolling in my company’s 401k plan.
In fact, we missed the employer match for two years in a row. Ouch!
Your blog post “How to Double Your Money Guaranteed!” pushed us into action.
We enrolled in our company’s 401k plan and set our contributions so that we will receive the entire employer match this year.
Over time, we are going to increase our contributions to our 401(k) retirement plans until we reach the IRS annual maximum.
We’re already feeling more confident about our retirement! Thank you.”
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Freddie, the thing is that typically, we Know What We Have to Do, at least people who have at least some familiarity with personal finance.
But somehow, we just don’t get to it.
The workweek, social activities, family functions, streaming and sleep often take first seat and get in the way.
Then we Miss Out on Valuable Opportunities.
At Budget and Grow Rich®, we’ve been writing for a very long time and love to research personal finance, saving money, investing money and building wealth And come up with new ways to help people save money and build wealth. And share them with our readers.
Over the years, many readers have told us that our writing style that’s in plain English – with anecdotes and concrete examples – make the moneysaving and wealth-building strategies, techniques and tactics crystal clear and help them put the ideas to work and Actually Save Money and Actually Build Wealth.
What’s more, You Never Know what explanation, story, example or roadmap will resonate – click – with You and make the difference and put money in your pocket.
That’s what we’re all about.
When I [Arthur] was studying managerial accounting in college, the professor illustrated a business’s profitability and breakeven with running a ski lift in the summer:
Businesses incur fixed costs regardless of whether business activity is brisk or a trickle. The business must pay its fixed costs or risk facing a lawsuit or going out of business.
In the off-season, the mountain could operate the ski lift for people that want to hike on the mountain, go sightseeing, go mountain bikng or dine at the restaurant and enjoy the vistas.
During the off season, the mountain could sell lift tickets at a discount to the winter ski season pricing.
Fixed costs include rent, property taxes, interest expense on its debt, often labor and other costs – Regardless of whether business volume is high or low.
Fixed costs do Not change with the level of business activity. In contrast. . .
Variable costs are the costs and expenses a business incurs when they operate a machine, manufacture one unit of product or serve one customer.
It might cost $1 to produce one unit of product and double or $2 to produce two units of product.
The point was that if the mountain sells lift tickets at a price that exceeds the variable cost to run the ski lift, it’s worthwhile.
Because the extra revenue and cash flow help cover (defray) some of the mountain’s fixed costs.
Realistically, selling discounted tickets all year round is probably unprofitable. But in the off season, the extra income – called ‘contribution margin’ – provides cash to cover some of the company’s fixed costs. Which increases the company’s annual profits or reduces its losses.
For me [Arthur V.], the visual of operating a ski lift, crystallized the concept for me.
And that shaped my writing style – with anecdotes and examples.
Which we bring to Budget and Grow Rich® you every week.
While you’re at it, to build more wealth, click here.
Let us know your thoughts.
See you next week.
Arthur VanDam, CPA MBA
Build More Wealth Right Now Click here.
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Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax, accounting or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!
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