This post is sponsored by Alliant Credit Union, where I’m a customer. All opinions are strictly my own.
I made many financial decisions all these years, some smart, some disastrous. Thinking back, I would say my smartest financial decision was contributing the maximum to my 401k plan every year since my first full-time job.
Fresh out of school, I was hired into the employee benefits department at a large manufacturer. Part of my job was to present the company’s benefits programs to new hires every month. I knew nothing about the 401k. In order to do my job I had to learn, unlike other new hires who only heard about it once in the orientation. Most employees just contributed enough to get the employer match. I thought the 401k must be so great when the government had to put a maximum on how much you could contribute in a given year. I decided to take full advantage of it by contributing the annual maximum out of the gate.
The annual maximum represented more than 20% of my pay at that time. Because I lived on much less when I was a student, 80% of my pay after tax still gave me a good step-up in what I could spend. It didn’t feel like a sacrifice. Once a good habit was formed, I carried it from job to job ever since. Later, I also started contributing the maximum to my IRA.
Contributing the maximum to my 401k every year since my first full-time job turned out to be my smartest financial decision. At the beginning, the account grew more from my own contributions and the employer match than from earnings. Later, earnings in one year exceeded my own contributions plus the employer match in that year. The difference grew larger. Over time, the total earnings exceeded my total contributions plus the employer match since the beginning. Today, my 401k account gives me a solid foundation for my financial security.
As one of the largest credit unions in the U.S., Alliant Credit Union wants its members to understand smart money choices because they know these choices can make a positive impact on people’s lives. Alliant Credit Union is having a contest for entries of the smartest financial decision you’ve ever made and the impact that choice had on your life. If your entry is selected you will win $5,000.
Enter the contest and submit your smartest financial decision at this link: http://bit.ly/2qKawRt. Not only will you win $5,000 if your entry is selected, you will also help others learn from your smartest financial decision.
After you submit your entry, you will receive a short link. Share your story in the comments below and share it with the short link on social media with the hashtag #SmartMoney. If at least two others use your link to submit their entries, you will have another chance to win $500.
Winning the contest would be great. Helping others learn from your smartest financial decision is more important.
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Friendly Russian says
The smartest financial decision I ever made in my life is to combine my and my wife’s finances and be on the same page. It turned out that we not only combined our bank accounts, but our goals and dreams. And our marriage became stronger
Sam Seattle says
Contributing the max to 401(k) is certainly the smartest, Harry. Congratulations!
Justin Watt says
I wrote an expanded variation of something I had included on my Index Card Financial Advice post:
If you like my “decision” here’s my referrer link: http://bit.ly/2s53Nmk
Harvest Eve says
My best financial move was to take a personal loan from my parents to pay off my mortgage when I first started working at a “real” job. I paid them higher interest than they could get in a bank but less than I was paying to the mortgage company. The arrangement was simple: “Pay us back as you are able.” Sometimes I made partial or intermittent payments. Occasionally, I made double or triple loan principle payments. Sometimes they gifted a monthly payment on a birthday or Christmas. One time they loaned me a small additional amount that got added into the balance. I also directed a monthly amount that I received from a land sale into their account.
I used a software program to keep track of all payments and automatically calculate simple interest on the remaining balance. We did all the appropriate paperwork so they claimed the interest payments as income on their taxes and I claimed them as a tax deduction. Eventually my salary increased enough that I was easily able to make a balloon payment for the total balance owing.
Where before I almost resented paying profits to a faceless institution, the payments to Mom and Dad were never a burden and the flexibility they offered (versus the rigid mortgage payment schedule) made all the difference…a true win-win for our family.