By Frank Conway
Before you get carried away with your spending plans, spare a thought for some really important money incentives that will super-boost your net worth.
Many employers love to brag about how well they care for their employees. And while it can be fashionable for employees to complain about how much the Government demolishes their pay cheque, recent college grads starting their first job have a golden opportunity to take some free cash from both their employer and Government too.
Here is how it all works.
Imagine you want to save €100. The normal way is to work hard and save. But, doing this after you get paid (and the Government takes its tax), that €100 saved comes out of your remaining income.
But what if you could save the €100 BEFORE the Government takes its tax? Well the answer is you can. In other words, you don’t have to save the full €100 at all. In fact, depending on how much you earn, you might only have to save €80 or even €60 and still manage to put €100 into your savings account. It’s called ‘tax relief’ and it’s designed to get more people to save for their long term money needs. In other words, Governments give you back some of your tax as long as you save it for specific long-term needs (in this case, post-employment).
Employers have also gotten in on the act and many will even match your savings (up to certain limits). So, for every €100 you put aside into your long-term savings account, employers often top that up with an additional €50 or €100.
So, while you might actually save €80, with the Government giving you back tax and employers giving you extra cash, you could end up with as much as €200 in your savings…now that really is a great rate of return!
So don’t fret about the free lunches and take the free cash instead, you’ll be all the richer for it!