Debo Hobo

Working for an employer doesn’t mean you have to be a wage slave or resort to buying weekly lottery tickets in hope of striking it rich. The trick is maximizing your income from your job, and knowing when to move on when it is no longer financially beneficial to the goal, making the most of your employee benefits and tax breaks and using that extra money to start investing.

The following 12 Steps are achievable by most and don’t require advanced investing knowledge and know how. Despite what some may think it doesn’t take a million to make a million. It can all be done one paycheck at time. So whether you are 25 or 45 it is not too late to get started, the important thing is that you get started.

Image Source-The Joy of Not Working

1. Look for better ways to do your job. Streamline a procedure making it more efficient, shave costs. If your position is currently a cost center streamlining it can create a new profit center for the company. Become an expert on a specific topic. Volunteer for a company committee or a special project– anything that will make you stand out as a team player and as a prime candidate for a promotion or a pay boost.

2. Don’t be afraid to negotiate. In a study of master’s degree graduates it has been found that those who negotiated their first salary boosted their pay by 7.4% compared with those who didn’t bargain. You are interviewing and presenting your job expectations just as much as the employer. Negotiations is an expected part of the process don’t sell yourself short.

3. Always be prepared to present your value at a moments notice. If possible, quantify how much your efforts add to the company’s bottom line. If that’s not feasible, spotlight your value with comparable salaries for workers in your position from a Web site, such as Salary.com, or from a professional association.

4. Have a pre-planned exit strategy for when it’s time to move on. Create a professional-looking page on MySpace that tells prospective employers why you’re an exceptional candidate. Always have your most current and polished resume posted on Monster.com. And don’t neglect more conventional networking: Join a professional association or show up at school reunions toting business cards. The fewer paychecks missed in the transition the better on track you will stay.

5. Exploit your company provided benefits- Contribute as much as you can to your 401(k) and other tax-deferred retirement plans. You’ll not only build a bigger nest egg, but you’ll also cut your tax bill. In the 25% federal tax bracket, every $1,000 you contribute to a 401(k) trims your taxes by $250. And you’ll save on state income taxes, too (where applicable).

6. Utilize those pre-tax programs. Contribute pretax dollars to a flexible spending account to pay for dependent care or out-of-pocket medical expenses. If you set aside $1,500 per year and you’re in the 25% bracket, avoiding federal income and Social Security taxes means Uncle Sam will subsidize almost $500 of your expenses. Be sure to use them by years end.

7. Don’t give Uncle Sam more than he “deserves”-Review your tax withholding. If you’re expecting a refund this spring, you’re having too much tax withheld from your paycheck — and making an interest-free loan to Uncle Sam. That’s no way to become a millionaire. Put more money in your pocket by using Kiplinger’s withholding calculator and then filling out a new Form W-4.

8. Stash savings in a Roth IRA if you’re eligible. Withdrawals in retirement, including decades of compounded earnings, will be tax-free. Check MoenyChimp.com to see what this years contribution limits are.

9. Don’t procrastinate your future away. The quicker you get a jump on putting money aside, the easier it will be to stuff a seven-figure cushion. If you start at age 25, for example, investing $286 per month will get you $1 million by age 65, assuming you earn 8% annually. Use this Retirement Calculator to get a better picture of where you are at.

10. Auto-Invest, either through your employer’s retirement plan or by setting up a regular deposit to a mutual fund or broker. You’ll never miss the money, and you’ll avoid two big mistakes: buying too much when stock prices are high and not buying at all when prices fall.

11. Keep an eye on the fees you pay for funds. The more you pay, the tougher it is to earn an above-average return. The typical hedge fund, for example, takes 20% of any gains, a huge hurdle to overcome. A better bet: no-load mutual funds with expense ratios of 1% or less. If you trade individual stocks, watch those commissions.

12. Keep it smart and simple. Be wary of get-rich-quick schemes or sales pitches for complex investments, such as oil-and-gas partnerships, that trade on the millionaire cachet to lure investors into buying high-fee products they don’t understand. Most millionaire households accumulate their wealth over the long term by sticking to a regular investing plan in a balanced portfolio.

Be smart with your money now be a millionaire at retirement….

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