The surest way to build your financial comfort and eventual wealth is by first, working for a living and second, making the most of your employment benefits.
Pay is paramount, but it's no longer just, "Show me the money." More than 27% of employers' costs for their employees is wrapped up in benefits such as health insurance, paid vacation, and savings plans, according to the U.S. Bureau of Labor Statistics. And too many workers overlook such fringe forms of compensation.
"In my experience, lots of people don't focus sufficiently on the value of the employee benefit package, especially when deciding between two job offers," says Paula Hogan, a certified financial planner and chartered financial analyst in Glendale, Wis. "And also, because of the lack of focus, people often miss the opportunity to capture big benefits."
The mother lode of perks is the 401(k) and other similar retirement savings plans. Through such arrangements, you set aside part of your pay before it's taxed, thus sheltering some of your earnings from tax collectors. That money is invested in an account that grows tax-deferred. And many employers match half or more of your contribution up to a certain level.
|Start early and sock away as much as you can.|
But employers offer more than ways to save for your later life. In its 2001 survey of what perquisites companies proffer, the Society for Human Resource Management found that 97% of employers offered health insurance; 96% offered life insurance; and 41% offered accident insurance. These plans help protect your hard-earned money from costly medical bills and help provide for your loved ones if you die or lose your ability to work.
The fact is, employers are offering an ever-expanding smorgasbord of benefits to attract and keep the workers they want. The same survey listed 160 possible benefits, 28% more than in the 2000 surveytwice the number in its first survey six years earlier.
The breadth and complexity of benefits can be dizzying. But don't let that discourage you from making the most of what your employer offers. It's part of what you earn.
Do your homework
Before you start a job, or at your company's annual benefits enrollment period, pay keen attention to what you can get, how much it costs andmost importantwhat you and your family could use.
"Take advantage of any information meetings," says Jerome Mattern, chairman of the compensation and benefits committee of the Society for Human Resource Management, in Washington, D.C. Mattern advises seeking the assistance of your human resource staff as well as the company administering the benefits. And don't be shy about asking the opinions of outsiders, including financial professionals you already know and trust. "Be informed," Mattern says.
Among key benefits to consider:
Depending on the company, plenty of other benefits are available, including credit union membership, adoption assistance, tuition reimbursement, flexible scheduling, transportation allowances, mental health counseling, club memberships, and merchant discounts.
"Some companies, usually the larger ones, offer to match employee charitable contributions," Hogan says. "But employers don't seem to advertise this benefit very loudly. So if you have charitable intent, check to see if you can amplify your own donations by getting them matched by the company."
The point is to learn what your company has to offer and to match that against what will benefit you so you can make the most of what you're earning.
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