What if I told you that you can do both? Are you contributing to your 401K? Do you have a health savings account? Who do you bank with? It matters.
Is it possible to pay off debt and invest at the same time? The answer varies for each individual. Everyone’s financial situation is different. I’m going to share three tools you’re probably already using; high yield savings account, 401K, and health savings accounts. A bonus fourth tool for self-investment.
A 401(k) plan is a tax-advantaged, defined-contribution retirement account offered by many employers to their employees (Investopedia). Remember that your retirement account is yours when you leave an organization, the money goes with you. Pro-tip; take advantage of the match if your company offers a match. What is a match? A contribution to your retirement savings based on the amount you contribute. There is generally a max that they will not go over. Stock options are nice perks that some companies offer to employees. You can go to your human resources department to get more information. Some organizations do 50% and others match dollar for dollar. That is why people say it’s free money.
Another form of investing is Health Savings Accounts. Eligibility requires a high deductible health plan, the money goes in tax-free, grows tax-free, and comes out of your income-tax-free for qualified medical expenses. The money rolls over and is yours to keep, even if you leave your organization the money is still yours for medical expenses. HSA’s are amazing. When I had my wisdom teeth removed I used my HSA to cover the portion of the cost that was not covered by my insurance. The limits for families are $7,000 and $3,500 for individuals.
Tips: Call your HSA service provider’s customer service line to learn more about their program. Give your money time to grow, like anything else if you spend it as soon as it comes it you miss out and using it for large medical expenses. Lastly, check your balance before medical appointments. There’s usually a number on the back of the card. Some systems can identify you by your phone number making it easy to check your balance.
One of my favorites is high yield saving accounts. These high yields are generally offered by online banks. Ally (who I currently use), Barclays (hear good things about them), Goldman Sachs, and Capital One are banks that offer these high percentage savings accounts. Why? Because you get a greater return for saving your money with them. Some have a minimum balance or deposit amounts, Ally didn’t. In two months with them, I doubled the interest that I made with my local bank over the past six years. Yes, you read that right, six years! My HYSA (high yield savings account) is connected to my local bank account where I can receive the money within two days.
High yield savings account, if you have a savings account make sure you’re using an HYSA to grow interest faster than national chain banks. Contribute to your 401 (k) and take advantage of match options. Take advantage of tax-free HSA accounts. Use them for all things medical related, prescription purchases, vision, and dental needs. Again it may not be feasible to every person interested in investing, but it’s a solid foundation that doesn’t take much effort. If you need more information or help please contact us at contact@400LBElephant.com
Bonus tool; read Money Master The Game by Tony Robbins This book not only changed my life but helped me open my stock brokage account. He outlined a well-balanced portfolio and introduced me to bae aka Vanguard! Worth the read starts out a bit slow but totally worth the read.