You work hard for your money, and every payday should feel rewarding. But if you feel more disappointed than celebratory because your final deposit is dwindled down by deductions and taxes, you may be missing some opportunities to maximize your paycheck. The net amount you receive every payday is not completely out of your control; there are a couple of things you can do to increase the amount of money you take home.

The first things you should investigate are cafeteria plans. Despite the name, cafeteria plans have nothing to do with cheap meals at work. This is a term used to describe medical spending or flex benefit plans. These plans are offered by some employers in addition to basic employee benefits. Cafeteria plans can be quite lucrative for employees, because the plans allow them to make contributions – using money from their pre-tax income – before the IRS takes their share. Essentially, employees making use of cafeteria plans receive an instant tax refund on money spent for qualified medical, dental and prescription expenses.

Qualified expenses within a cafeteria plan may include health care costs (those expenses not covered by basic health insurance), dependent care assistance, transportation or commuting costs, group term life insurance and possibly additional vacation days. These plans are authorized by the IRS and are a great way to maximize both your paycheck and your benefits coverage, because the plans lower your amount of taxable income, therefore lowering the amount of taxes withheld.

Similar to a cafeteria plan, some employers offer a Flexible Spending Arrangement or Flexible Spending Account (FSA). These plans also allow the employee to set aside payroll-exempt earnings, transferring them into an account designated for qualified expenses. FSAs are more restricted in terms of how that money may be used, and FSAs are generally limited to medical expenses. One advantage of the FSA is that these accounts may be accessible via a debit card, enabling employees to pay for medical costs directly from their FSA.

If you are not currently enrolled in plans such as these, talk with your supervisor or HR department representative to see if cafeteria plans or FSAs are available to you.

Another avenue to explore for maximizing your take-home pay is a retirement plan – such as a 401(k) – in which contributions are made to qualified investments before taxes are deducted. Even though your contributions are not taxed, it is important to remember that any amounts withdrawn from a 401(k) are taxed. Also, many employers offer matching funds that employees invest in their retirement plans, thus helping employees build their retirement nest even more quickly. If your employer does not offer a 401(k), a similar benefit may be obtained by investing in an Individual Retirement Account (IRA).

If you have already begun saving for your retirement but still need to increase your income, you may choose to reduce your 401(k) or retirement contributions. While this may seem drastic and unwise, it may be a successful temporary solution for those who need a short-term infusion of cash to get caught up on bills or debt. However, this should be done with extreme caution and with a commitment to resume contributions as soon as possible.

Even the smallest increases in your net income can result in big differences to your financial health, and if you have high-interest credit card debt to pay off, you’ll earn more in the long run by using some of those funds to pay down that debt.

You work hard for your money, so get more of what you earn, and make that money work for you.


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