#KemCents: 3 Ways to Pump Up your Paycheck!
If you are not happy with the amount of money you receive paycheck after paycheck, there is something you can do about it.
Of course, you can look for another job or work a “side hustle,” but in the meantime, consider pumping up your current pay right here and right now!
1. Review your withholdings
A quick fix to increase your pay is to review your income tax withholdings. Adjust your withholdings to break even at tax time. Of course, it is great to get a tax refund on April 15, but the reality is you are allowing the government to use your money tax-free throughout the year with no benefit to you!
There is a great tool on the Internal Revenue Service’s (IRS) website to assist. After you have determined the correct amount of withholding, contact your human resources department to make the appropriate adjustments.
2. Take advantage of employee benefits
Another great way to increase your pay is to take advantage of a flexible spending account (FSA). If your company offers these, take advantage immediately!
An FSA allows individuals to put aside tax-free dollars into an account to help pay for both medical and dependent care costs. For instance, if you earn $2,000 each payday and decide to set aside $200 into an FSA account, you are only taxed on $1,800 each payday. Thus, not only helping you pay for qualified costs, but reducing the amount of taxes as well.
In addition, you now have $200 tax-free dollars to pay for qualified costs, thus giving you more purchasing power!
3. Opt for high deductible insurance
Lastly, if you are pretty healthy and want to get the most of your paycheck, consider a high-deductible health plan (HDHP). As its name suggests, an HDHP has a high deductible, but very low premiums. For this reason, it is ideal for young workers or those who are less likely to use their medical insurance throughout the year.
But keep in mind, it is a high deductible plan! So, for this reason, be very careful when considering these types of plan.
About Kemberley Washington
Kemberley Washington, CPA is a professor at Dillard University and writes a finance blog at Kemberley.com. She is the author of The Ten Commandments to a Financial Healing. Follow her on Twitter @kemwashcpa or hashtag #kemcents.