Increase Your Contributions
Can you contribute the maximum amount for your 401(k)? Not many people can! For example, back in 2020 as well as in 2021 the maximum amount was $19,500. An employee that takes home $50,000 can’t realistically set nearly $20,000 away. Also, those at the beginning of their careers face the same issues.
But a good strategy is to increase your contributions little by little. From a cash-flow perspective, these small increments won’t hold you back financially. But in terms of your 401(k), they’ll mean a lot, especially in the long run.
So, you should aim to increase your contributions by 1% every month, quarter, or year, depending on your finances, and always contribute more when you get bonuses or raises. If your salary sits at $50,000, then a 1% increase only amounts to $41.67 per month- not bad, huh?