When your paycheck hits your bank account, it might not look like much.
Federal, State, Social Security and Medicare taxes are taken out. Medical, dental and vision insurance and your 401(k) contribution are withdrawn before you even see your check.
Automatic deductions such as your Employee Stock Purchase Plan, car payment and transfer to savings hit, too. Your net pay looks a lot different than your gross pay. Don’t let that fool you though.
When you look at one single net paycheck, your income stream might look small but when you look at how much money you make over your lifetime, it’s astounding!
For example, if you make $50,000 and get a 3% raise each year, even if you never get a bonus or promotion, you’ll make $3.7 million dollars over your lifetime!
Even if you are at the tail end of your career, you’ll still make a lot. For example, if you have 10 years left to work and make $100K per year, you’ll make another million dollars before you retire.
Let’s face it. A lot of money flows through your hands. It might not seem like it, but it does.
The key is to keep some of it.
Check out this Lifetime Income Calculator and see how much you’ll make during your career.
If you are inspired by this idea, do something about it.
Here are 5 ways to keep some of your money:
1. Bump up your 401(k) by 1%
2. Start a Roth IRA (if you qualify)
3. Set up an automatic transfer from checking to savings or an investment account (timed to hit on payday)
4. Enroll in your employee stock purchase plan at work
If you need to, change your mindset. Tell yourself:
I make a lot of money, I’m going to keep some of it.
Strategy is everything.
If you started saving late, you need more than just a 401(k) to fund your retirement.
7 Retirement Lessons For Late Starters