Master Your Finances by Making the Most of Your Employee Benefits

In the modern workplace, we’d like to think that a sharp mind and a strong work ethic are enough to build a secure future. Savvy professionals understand, however, that a large part of their compensation isn't found in their salary alone, but hidden within the fine print of employee benefits. Yet, for too many people, this invaluable resource remains a mystery. We sign up for what's familiar and then put our benefits on autopilot, leaving thousands of dollars on the table.

Photo by Micheile Henderson

This lapse is a critical mistake. If you play your cards right, your employee benefits are a strategic tool for wealth building, expense reduction, and personal well-being. It's time to stop treating them like a chore and start treating them like the cornerstone of your financial strategy.

The 401(k): One of Your Most Important Employee Benefits

Let's start with the most impactful benefit of all: retirement savings plans like the 401(k). If you are not contributing enough to get the full company match, you are quite literally walking away from free money. A typical company match might be a dollar-for-dollar match on the first 3% of your salary you contribute. That is an immediate, guaranteed 100% return on your investment, a return you will never find anywhere else. But the power of a 401(k) goes beyond the match. The money you contribute is pre-tax, which immediately lowers your taxable income. This means you save money on taxes today while building a nest egg for tomorrow. The key to maximizing its value is simple: start early. Thanks to the magic of compound interest, even small contributions made in your twenties can grow into a substantial sum by the time you're ready to retire.

Health Insurance: Stay Healthy, Save Money

Your health insurance plan is more than just a safety net for medical emergencies; it is a tool for proactive health management and expense control. The biggest mistake most people make is choosing a plan based solely on the monthly premium. Instead, you need to understand the deductible, the copay, and the out-of-pocket maximum. A high-deductible plan may have a lower premium, but can expose you to significant costs before your insurance kicks in, while a low-deductible plan can be more expensive monthly but provides greater predictability. Maximize your plan by using all of its features. Take advantage of free preventative care visits, annual checkups, and flu shots. Understanding your plan lets you make informed decisions about your health and your wallet, preventing a small health issue from becoming a major financial burden.

Photo by Kelly Sikkema

Pre-Tax Accounts: Your Secret Weapon Against Expenses

For many employees, pre-tax flexible spending accounts (FSAs) and health savings accounts (HSAs) are the most underutilized benefits. These accounts allow you to set aside money from your paycheck before taxes are taken out, effectively reducing your taxable income.

• Flexible Spending Account (FSA): An FSA is a powerful tool for covering predictable out-of-pocket medical expenses, such as prescriptions, dental work, and vision care. The primary rule to remember is "use it or lose it." You must spend the money within the plan year or it is forfeited.
  

• Health Savings Account (HSA): This is the holy grail of benefits for those with a high-deductible health plan. An HSA is a triple-tax-advantaged account: your contributions are pre-tax, the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. Unlike an FSA, the money rolls over year to year and is portable—meaning you can take it with you if you change jobs. If you’re considering a high-deductible health plan, an HSA can offset this option nicely by helping you save money for expensive health care procedures, both foreseen and unforeseen, that might be necessary in the future.

Beyond healthcare, many companies offer dependent care FSAs for childcare expenses or commuter benefits for public transit and parking. These accounts are a no-brainer for reducing your cost of living and making your money work harder for you.

Paid Time Off: The Ultimate Productivity Tool

Research indicates that anywhere from 46% to nearly two-thirds of employees do not take all of their available paid time off (PTO). Remember that isn't just a reward; it’s a critical investment in your professional performance. In a culture of burnout, taking your full allotment of vacation days is a strategic move. Time away from the office revitalizes your creativity, improves your mental health, and prevents a career-stifling case of exhaustion. Don't let your vacation days expire. Plan them out, use them, and return to work re-energized and more productive. Even a little two- or three-day stay at the coast or in a nearby city can work wonders in shifting your mindset and re-energizing your perspective.

The Final Step: Conduct a Benefits Audit

The final, most critical step is to conduct a regular benefits audit. Carve out a block of time—at least an hour—and go through every benefit your company offers. You may be surprised to find discounts on home and auto insurance, tuition reimbursement for professional development, or even an employee stock purchase plan that offers shares at a discount. You may even be covered for the costs of a nutritionist, massage therapy, or acupuncture. Certain states (like Oregon and California) interpret the term family more broadly, allowing the Family and Medical Leave Act (FMLA) to open up possibilities for allowing paid time off for not just infants but also parent, in-laws, and grandparents. Each of these benefits has the potential to save you money, boost your career, and give you a powerful edge. By taking ownership of your benefits, you’re not just building a more secure future; you’re making a bold statement about your commitment to your own success.

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Kristin Schuchman, MSW is a career counselor, business coach, and author based in Portland, Oregon who works with creative and mission-driven professionals. She writes resumes and coaches individuals seeking support for career indecision, next steps, work re-entry, advancement, starting a business, and work-life-balance. She offers a free 30-minute Zoom or phone session and presently works with clients in-person in Portland and remotely. You can find her books The DIY Website Workbook and Jump Start: How to redirect a career that has stalled, lost direction or reached a crossroads on Amazon.