If your job offers benefits, they will most likely automatically kick in at a certain time. For some benefits, though, you need to voluntarily take action to fully take advantage of them. Today I talk about three no-brainer benefits that you should take full advantage of.
1) 401k match
Many employers offer a 401k match up to a certain percentage. For example, at my current employer, I get a 100% match for the first 3% that I voluntarily put in my 401k, as well as a 50% match for an additional 3%. If I was not contributing to my 401k, or contributing less than 6%, I would miss out on some of this “free” benefit. There may be a period of time before you are “vested”, or have a claim to the employer contribution. For example, if you are only at an employer for a year and then switch to another company you may not get the employer match, even if it had been accruing since day one.
2) Health Savings Account (HSA)
I’ve talked before about the triple tax advantage of a Health Savings Account (HSA). While employers will usually deposit something like $500 or $1,000 in your account throughout a year, you may voluntarily put in quite a bit more than that (in the range of $5,000+ for a couple/family). All the money that you deposit in your account is pre-tax, funds may be used for qualified medical expenses without tax liability, and finally investment income from the account is not taxed. The best thing about HSA accounts? The money never goes away. If you switch employers, it stays with you. At the end of the year, the balance rolls over. Voluntarily contributing money to this account has a lot of advantages, but probably the biggest advantage is not having to worry about where you will find the money for large unexpected medical expenses. Many twenty-somethings I know have been caught with little to no balance in their account when they suddenly have a major – and completely unexpected – medical expense.
3) Employee Stock Purchase Program (ESPP)
If your company offers an Employee Stock Purchase Program (ESPP), think long and hard before deciding not to contribute. Sometimes the terms of these programs are incredibly favorable. At my employer we have a stock purchase program that goes in six month time frames. Before the period starts you can voluntarily to contribute 0 to 10% of your paycheck towards the program. At the end of hte six months, stock is purchased at the lower of the two prices, either the first day of the period or the last…and at a 15% discount. Worst case scenario you make 15%, best case scenario you can double your money, or better. I know people who despite understanding the terms of this program voluntarily opt out. If you’re given this option, don’t pass up the opportunity.
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When it comes to full-time employment, especially jobs that offer benefits, it’s important to make sure you are fully taking advantage of the benefits being offered to you. While not everyone has the benefits I listed here, there are other benefits that you may be offered in your job – whether it’s being able to have flexible scheduling, overtime pay, or something else. When thinking about your jobs compensation be sure to factor in all these benefits, not just your full-time pay.
Whether your job offers the benefits listed or not, what benefits do you take advantage of at your job? It can be paid time off, flexible work schedule, or something else.
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When I worked for IBM, they offered the opportunity to work at any of their workplaces, so I would take a train to Provence on Thursday night, work from a southern office on Friday and be out by 5pm, already at my weekend destination. The customers had no idea since you could forward your calls to your temporary work station. One of my colleagues at another firm used to take advantage of free TP and all the coworkers checked who went to the bathroom with a bag to bring TP home, it was kind of sad :)
RFIndependence That’s an awesome perk! Yeah the free TP thing is sad…I guess people will take advantage of any perk they can.
Good list DC! It’s crazy how many do not take advantage of the match. I have heard all the excuses and VERY few of them actually are justifiable. The thing I would add with the HSA is if your employer offers any wellness programs. I have seen many employers offer some type of small promotion to get you to participate. I had one job that paid $50 into my HSA for filling out a 10 minute questioner…it was a no brainer for me.
FrugalRules Sounds like a free $50 to me! Yeah the excuses really don’t add up…there may be some extreme circumstance where they do, but I haven’t seen it yet.
My company offers a SEP, free insurance, vacation time and a couple of other things. We are a very small company so the benefits are not bad, but not the greatest also.
SenseofCentsThat’s not too bad for a small company! I know it can be hard for small businesses to compete with large businesses when it comes to benefits.
We take advantage of an HSA and 401K Match! My husband’s company used to also give very generous profit sharing but that got cut last year =/
Holly at ClubThrifty Profit-sharing would be amazing! It’s too bad they ended that. The more employees share in profits, the more motivated they will be…at least that’s what I would imagine.
The last corporation I worked at had one of the best benefit plans I have ever had. We had excessive coverage for prescriptions, dental and extended health benefits for chiro, massage, accupuncture, crutches and so on. We also had the health savings account that we could use for medical purposes but it could also be used for any major expense like joining a gym, or something like that. I remember that year end would roll around and so many people on my team had forgotten to use the HSA and didn’t care. And they wouldn’t take advantage of free massages either. Of course, I did, and the benefits plan is the one thing I really miss.
TacklingOurDebt Yeah that does sound pretty nice! So I’m assuming the HSA you are talking about did not roll over into the new year? Pretty nice that you could use it for massages…
No the HSA did not rollover, and the massages and chiro stuff was a separate benefit outside of the HSA amount. Sorry to carry on about it, but it was one of the reasons why I worked there as long as I did. It was so nice! :-)
TacklingOurDebt It sure sounds nice!
I have pretty good medical insurance, however I do use a Flexible Spending Account (FSA) to pay for out of pocket medical expenses.
krantcents1 I’ve heard of FSA, but does it roll over each year? I’ve heard it doesn’t. That’s the one thing I dislike about them, but I suppose the company probably bankrolls it?
I love 401ks! Nothing better than free money!
ayoungpro 401k match is definitely a big win.
Our ESPP isn’t nearly as good. We buy at 15% discount on the market price on the last day of the period but then we can’t sell it for a time period (at least 6 months) so we could easily lose the 15% is something happens.
Money Life and More Keep in mind….the ESPP I described is for a Fortune 25 company. I’m not sure what size of a company you work for, but it seems like the ESPP is better the bigger the company.
DC @ Young Adult Money Money Life and More We’re in the top half of the 500 somewhere.
I completely agree with you. There are many more benefits than just getting a salary. If you add up the other benefits here, it can easily raise your salary by 10-15%. I’m amazed at how many people don’t take advantage of these obvious benefits.
As a former corporate exec I was always amazed how people could decide NOT to go with the 401(K) and compay matching – free money folks!! I tried to sit with each person who declined and convince them of the benefits – and usually succeeded in bringng them over to the “right” side!
I have an HSA too… but it’s a health spending account, that can be used to cover medical expenses that aren’t covered by the government or my benefits. For example, if my glasses cost more than my bi-annual glasses alotment, or (true story) if my spouse has used up all of the physio money for the year already, or birth control, which isn’t covered under the prescriptions coverage.
We dont’ maximize our benefits (ie run out of massage money), but lots of people don’t even come close! They just pay for things out of pocket and never realize it can be covered :-S
Checking out your site, some good advice in this article. A couple things to keep in mind:
First, with a true HSA (not a FSA, as one of the comments mentioned), you can also take money out of it at any time for a qualified expense, it doesn’t have to be when the expense occurred. So if you have the money to pay for something that qualifies, it might be a good idea to keep your receipt and not take it out right away. You can always take it out later, but you can also use the HSA as a kind of retirement account, where you can take out tax free (up to the amount of qualified expenses) money.
Second, while an ESPP can be a good deal, you need to be careful and make sure it is. For one thing, as a general thing it’s not always a great idea to have too much of your net worth in the company you work for. Diversification is important in investments, and given how much of your financial health is already tied to your current company – your regular paycheck – it is probably a good idea to keep your savings elsewhere. But yeah, if you can buy stock at a reduced price and sell it rather soon, that’s free money.