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Have you ever wondered how to maximize your income? Well you are in luck because we’ve developed this guide will teach you the 5 levels of income maximization!
If your employer offers a 401k match, invest to take full advantage of it. Remember to contribute just enough to get 100% of the match. Don’t consider this to be free money; this is money that is already yours. Every employer has a compensation package that they have worked out to provide their employees. If you are not taking advantage of your match then you are not maximizing your compensation package.
EXCEPTION: If your employer does not offer a match, we do not recommend contributing to your 401k first. Move forward to Level II.
Pay off your student loan debt, credit card debt, or any other debt that you have accrued. Consider this to be a form of investment. Instead of accruing future interest, you are deducting the current interest rate that you would be making in future payments.
Open up a Roth IRA account and max out your contributions to that account each year. Let compound interest work for you; the earlier you start contributing the less capital you will have to invest for your retirement. Plus it will all be tax-free!
If you have money left over after Level III go back to your 401k account and max out your contributions to that account. This will help you today by decreasing your total taxable income thus decreasing the amount of federal taxes you owe each year.
If you still have money left over after Level IV, it is time to open up a taxable investment account. This is not a retirement account and it is important to remember that you will be taxed each year on your earnings.
Many people never make it past the Level IV level and that is okay. You need to make sure that you, at the very least, get your feet onto the Level I. Maximizing your income isn’t about how much money you make, it’s about how much money you are able to save. Save first and then spend the rest instead of spending your paycheck first and then saving the leftovers. Getting started is the hardest part but once you’re there it will be less difficult to climb to the higher levels.
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