Chuck Hippee

Feb 15 2017

Convert Your Pay Raise into a Savings Vehicle


Convert your pay raise into a savings vehicle.

The start of a new year is often when last year’s hard work pays off in the form of pay raises or cost of living adjustments. Instead of using that money to buy a new pair of shoes or the latest tech gadget, think about your wage increase as a savings vehicle for this coming year.

Use your wage increase to invest in the full amount that your employer will match to your 401(k). If your boss handed you $500, would you turn it down? Of course not! Getting your full employer match for your 401(k) is no different. Since 401(k) contributions may be deducted from your income before taxes, it doesn’t affect your paycheck as much as you may think.

If you already get the maximum contribution from your 401(k), consider investing in a Roth IRA. Roth IRAs don’t lower your tax bill now, but provide tax-free money for retirement if not withdrawn before age 59½.

If you are already contributing to your retirement fund, consider placing your wage increase into a savings account. The average family doesn’t have the recommended savings for financial emergencies. It’s wise to have at minimum three to six months of living expenses in a savings account you can easily access in the event of a financial emergency.

Converting your wage increase into a savings vehicle is a smart way to increase savings without feeling like you are cutting down spending – plus the pinch on finances isn’t as noticeable. Make your hard earned raise something that can help you achieve your savings goals – you’ll be thankful in the long run!

Investment products are not a deposit, not FDIC insured, not insured by any federal government agency, carry no bank guarantee, and may go down in value.
 
Chuck Hippee

About Chuck Hippee

Charles “Chuck” Hippee, JD is Vice President, Retirement Plans Hills Bank’s North Liberty location on Forevergreen Road. He has been at Hills Bank since 2001 helping customers with financial planning and retirement planning including pension, profit sharing, 401(k) plans, and IRAs. Chuck obtained his BBA from the University of Iowa and continued his education at Creighton University School of Law in Omaha, Nebraska. His prior professional experience includes practicing law in Cedar Rapids and working for a national bank as a specialist in retirement planning and institutional investments. Chuck can be reached at chuck_hippee@hillsbank.com.


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