5 Easy Tips for Taking Control of Your 401(K)

When my current employer decided that the business was growing at a consistent rate and that she wanted to offer a 401(k) retirement plan to employees, I was stoked. When she decided she would match at 4%, I was even more stoked! A combined 8% of my earnings will be going to my retirement fund instead of taxable income to fill Uncle Sam's pockets at the end of the year. Sounds great to me! But how do I get the most out of my 401(k)? Keep reading for my 5 easy tips for taking control of your 401(k).

1. Roll over old 401(k) - Do you have a 401(k) from a previous employer that's just sitting out there in space? I did for years. At one point I totally forgot about that $2,500 just sitting there in that account! When I remembered my money, floating there in space, I decided to take control and suffer through what I thought would be a really boring and painful process of rolling it over. Turns out, it was quite simple. One short filled-out form later and my new 401(k) was authorized to withdrawal and deposit the $2,500 from my old 401(k). Done!

2. Increase your contributions - Every time I get a raise or a bonus I increase my contribution. It could be as little as a 1% increase. Regardless this is an important step if you want your investment to grow larger and faster. And besides you won't even notice that 1% or more is gone when it comes out of a raise or bonus!

3. Match the match! - What you contribute to your 401(k) is going to depend on a lot of different factors. Are you in debt? Is your job stable or are there layoffs in the works? Could you better use the money to build up your 3-6 month emergency fund? I decided that the best thing for me is to match what my employer is going to match. Until my debt is paid down, I will stay at this comfortable level. I can't see passing up free money!

4. Picking the Investment - There are a lot of choices out there with different 401(k) plans. Bonds, money markets, stock mutual funds, value funds. It's really going to depend on your risk tolerance and years till retirement. You're going to need to do your research on this one. (Stay tuned for a more intense 401(k) investment-picking blog post to follow!)

5. Don't borrow - Leave it alone! The only way it will grow is if you continue to contribute to it and let it grow up to be a be strong pile of cash!

Take control of the management of your assets. If you don't understand something about your investment then ask. But remember, no one cares more about the safety of your money than you do.

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