How much do you love your 401(k)?
How often do you share your love of your 401(k) with your colleagues and anyone else who will listen?! ;)
If you have good answers to these questions, you should stop reading this right now and go enter Jackson, Grant’s annual 401(k) Champion® Award contest where you can win one of three $1,000 cash prizes!
>>>> ENTER HERE <<<<
They give out $3,000 every year, and out of the last 6 winners, 3 of them were BudgetsAreSexy readers!! Which means either we’re super lucky as hell over here, or more probable – we’re smart as hell and know a good deal when we see one :)
In either case, if you’re over 21, a legal resident of the U.S., and currently enrolled (and in love!) with your 401(k) plan, be sure to take the time to enter! And don’t half ass it either – just a few extra minutes can be the difference between $1,000 and $0.00. Here are some of the winning essays here and here to give you an idea of what they’re looking for…
The deadline to enter is October 20th, and they’ll announce the winners November 14th.
Go go go!!
As for the love I have of my old 401(k)??
Oh gosh, I can’t even put it into words, but I’ll try…
I love 401(k)s more than…. Britney Spears!! (Woahhh!)
And beer! (double woah!)
And sex!!!!!
Okay, well maybe not sex (is anything better than that?), but I’m not exaggerating when I say that investing in my 401(k) was one of the best things I ever did for my finances. And while I no longer have access to one as a self-employed degenerate (😢😢), I still carry on the tradition of maxing out my SEP and Roth/Traditional IRA every year which alone will get you to millionaire status in just a matter of time. Even if you spend every other penny you get!!
Here are 4 reasons I love 401(k)s so much:
#1. It’s FORCED savings! And you don’t even notice you’re doing it because it’s automated!!
#2. It SNOWBALLS when you leave it alone. Which was mind-blowing for me over a decade ago, and I can still remember to this day watching it climb to $50,000 and not believing how easy it was all because I never touched it… Something that excessive fees and penalties helped with as it only lowered the temptation to pull from it, unlike with savings!
(so PRO TIP: If you want to stash your money somewhere that’s hard to access, make it your 401(k)! And then see how fast it takes to become a 401(k) Millionaire like our friend Fritz 💪💪)
#3. FREE MONEY is involved! (Usually!) I’ve had employers match anywhere from 3% to 100% of my salary contributions (not a typo), and each time I soaked up as much as I could while it was free for the taking… Especially with the 100% company which was just INSANE, and even more so – the fact I was only one of 3 or so who actually contributed to the plan!!!
As soon as I found out about this I upped my paycheck contribution to 90%, thereby living off $200 paychecks (and draining my savings! Lol), until enough months passed where I hit the legal limit of $16,000 or whatever, and then dropped it down to 0% once it was maxed out to start refilling my savings again…
Easiest $16,000 I ever earned. Three years in a row!
(And really, as you know, it’s *much* more than $16,000 as it’s compounded year after year after decade now, easily crossing the $100,000 mark with how the markets have been these past handful of years…)
So something to think about when you decide not to invest or save, even for just one day. As my friend Jim Wang recently said,
“When you delay your savings for one day, you don’t lose today. You’re losing that last day your money would’ve been invested before you started taking withdrawals. If you’re going to invest for 20 years, that’s 7300 days of investing. You’re not giving up Day 1, you’re giving up the fact that Day 1 will have been invested for 7300 days. That’s a lot of money.”
Keep investing and grabbing that free money!
#4. And lastly, the more you invest, the higher your CONFIDENCE gets. Especially if you’re in the early part of your financial journey…
There’s a big difference between having $1,000 in your savings account and $100,000, the least of which is feeling more solid and confident in your overall standing and decision making! It’s a lot easier to make moves with a nice cushion behind you than it is without, whether we’re talking career moves or starting new businesses, or even asking a girl out on a date! More money gives you confidence across the board, and your 401(k) is a fantastic, easy way to get that train going…
(For those who don’t have access to 401(k)s, btw – OR – have employers who don’t believe in offering free matches (!!), start by maxing out your ROTH IRA first if you qualify (max limit for 2022 is $6,000), and then if you have extra left over from there move to your 401(k) to keep stashing away. Even without matches they still offer some solid benefits (like tax-free growth!), but you’re tied to your employer’s fund choices which aren’t always the best. Thus, why people recommend starting with an IRA first which you control 100% yourself, then moving to the 401(k).)
(And also – if you have multiple OLD 401(k)s laying around, take the time to consolidate them all into your IRA too! No reason to keep being invested in less than optimal funds if you’re no longer forced to!! And will help with overall management and planning too 👍)
So yeah, huge fan of 401(k)s even if they do seem to attract hate these days, so if you currently have access to one and are *not* contributing at least to the company match, please do yourself a favor and fix that by the end of the week! It should only take 5 minutes to log onto your company’s portal or pick up the phone/take a trip to your HR department…
And then I want an email when you hit your first $50,000 too, or better yet – $500,000! :) There’s no way you won’t get there if you keep at it year after year, but you gotta get the ball rolling NOW so Future You can bask in its glory!
Make it happen!!
And make sure to enter the contest for a chance at that $1,000 too. Who knows, maybe you’ll be the 4th BudgetsAreSexy reader to win?!
Yours in investing and Britney Spears,
PS: I’m not affiliated with the 401(k) awards at all – just love what they’re about and want you to get free money!!
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“When you delay your savings for one day, you don’t lose today. You’re losing that last day your money would’ve been invested before you started taking withdrawals. If you’re going to invest for 20 years, that’s 7300 days of investing. You’re not giving up Day 1, you’re giving up the fact that Day 1 will have been invested for 7300 days. That’s a lot of money.”
But is it though? Did you not just have your first investment day equal to 7299 days invested, and miss out on the last day which is a 1 day invested amount?And at the same time, would you be invested for 20years, or 19years and 364 days if you didn’t start today?
HAHA yes, you’d still be good if you started saving tomorrow instead of today, but the main point of course is that every day you skip the less $$$ you’ll have later ;) So good to just START now and harness as much extra time and compounding as you can! And *automating* things will only make it easier…
I am a huge 401k fan! I am rocking a bumper sticker that says “My other vehicle is a 401k. ”
The worst parts are getting them started and getting the money rolled out when leaving a job. This job they didn’t start the contributions for 2 or 3 paychecks. And you couldn’t even set things up until after the 1st paycheck.
Leaving the last job I got an email that they might send me a check of my 401k funds. I had enough in there to get the standard 60 days. At that place the 401k $ didn’t show up until 7 days after the paycheck, so I did need some time before I rolled it out. I didn’t want to deal with the tax issues of them sending the check to me vs properly designated to my investments on top of leaving a job that showed promise but ended up not being the right fit.
Once all the paperwork stuff is done on either side, set it and forget it savings is the way to go! Still good to check on it periodically. One place gave a catch up on their contributions, I asked to be sure I knew what was going on.
Oh yeah, the paperwork can be annoying for sure… Especially when you’re the only one who cares about it and everyone else just treats it as part of their job and “gets to it when they get to it” lol… Still, a good thing to stay on top of and see through to the end! One-time pain for life-long gain 😎
Why can’t you do a solo-401(k) JMoney? If you can do a SEP you can do a 401(k). You’ll likely be able to contribute a lot more through the 401(k)!
This is true, actually! But still won’t be able to get any *free* money as I’ll just be paying myself, lol… I should look back into it though as it’s been a few years since comparing it with the SEP.
i am a 401k evangelist at my job. we hire new people and i make sure they get on board AND let them know about the fund options. our match is very generous so i teach them how to sign in and navigate the whole thing and give ’em the ol’ compound interest tutorial if necessary.
YESS!! GOOD!! We need more 401(k) angels like you!! I hope you submit your essay as that’s exactly the kind of stuff they’re looking for! Then just throw in a few (appropriate) laughs too so they really can’t resist ;)
Yep J, I loved my 401K from a previous employer, but the company I’ve worked at for the last 14 years, doesn’t have one. However, the money I managed to save from my previous employers 401K, and their nice match, has tripled since I left in 2008. I can’t say I had too much to do with it tripling, so I’m grateful to have had that opportunity to work for an employer who helped me squirrel away a ton of acorns! It’s really paid off!
Triple – nice!! Good thing those investments were tied into a 401(k) too so less chance of you cashing out and moving around during those scary times of ’08 :) It’s gone up SO MUCH by then and like you said you didn’t have to do a thing!
I wonder when the last time someone brought up the 401(k) option with your employer? Think it’s worth revisiting it and seeing if you can get lucky? Maybe if you help them navigate it or something?
Thanks! I just entered.
lemme know if you win!!
You’re the first person I’ve heard that lived partly off savings so you could max out retirement, (like we do sometimes).
hah – awesome! you gotta do whatever it takes to make it happen, right? ;)
Cool! Thanks for sharing, I will be sure to enter! Do you know of any other “adult-life” scholarships/grants like this?
I didn’t try hard enough while in college to apply for scholarships and I wish I did. I also always wish there were things to apply for now!
Thanks again!
-Leila
Hah – totally!! If it weren’t for my parents forcing me to apply to things growing up I never would have either :( I’ll have to keep my eyes open for similar grant-like stuff… Can’t think of any at the moment but there’s gotta be more out there?! It can’t just end when we grow up…