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Painless Savings Idea to Share

January 20th, 2018 at 11:15 pm

I had this brainstorm, which I am going to implement for myself and wanted to suggest this to others as well: If you are not already maxing out your pre-tax retirement contributions, ask your HR/employer to increase your 401k/403b contribution by an additional percentage point when they change over to the new withholding tables, which should be sometime in February. Without taking any action, the change in withholding should make your take-home pay go up by a bit--a small amount, maybe easing the pressure a tiny bit if you are living paycheck to paycheck, but not enough overall to really make you feel wealthier. If you are not living paycheck to paycheck and you have gotten used to living on your current take-home pay, take advantage of the change in withholding tables to divert that extra amount into long-term savings rather than spending it on extra consumables. Your take-home pay should remain similar to what it was and your savings will increase. You could wait until after the change takes place and compare your January and February paystubs, or you could try to figure out the change from IRS Notice 1036 with the new withholding tables vs Pub 15 2017 if you are an accounting geek, or if you have a bit of wiggle room in your budget you could just take it on faith that one change will offset the other by an amount that you won't really notice. I'm not a master of payroll but I did calculate for myself that the decreased withholding will be about 1% of my takehome pay and thus a good opportunity to increase my 401k contribution from 11% to 12% (I also have a set dollar amount taken each pay and put into my HSA account, some of which I spend during the year and some of which ideally gets saved; between the two set-asides I will be putting away over 16%, although last year I did end up spending about 2/3s of what I put into the HSA for out of pocket medical expenses. In a healthier year I'd be able to save more of that, and at least the healthcare expenses were paid for with pre-tax dollars.)

6 Responses to “Painless Savings Idea to Share”

  1. creditcardfree Says:

    Good idea. I will consider it when I start doing our taxes and projecting for next year.

  2. MonkeyMama Says:

    I find this website to be a really good salary calculator, for anyone who needs it:

    Text is and Link is
    It's been updated for the new tax tables.

  3. frugaltexan75 Says:

    I should be getting a 2.5% raise in February, so I'm waiting til then to make any changes.

  4. Dido Says:

    MM, thanks for the website reference!

  5. PatientSaver Says:

    Good idea.

  6. creditcardfree Says:

    MM, I love paycheck city for figuring withholding and net pay, too!

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