Hey, graduates, you may be thinking to yourself how much of what you just endured will actually be used IRL (in real life). If you’ve just graduated from High School, you’re thinking Algebra will NEVER come in handy. In college, it’s likely you barely remember what class you got up for, but probably remember the first beer you legally purchased. Those of you finishing your masters or doctorate, you’re free to brag that you remember every detail of your education (yeah, right).
We all took economics in our High School years. We may have even taken something like that in college somewhere along the way. It’s during this course when you likely spent at least one period talking about 401ks. It’s so buried in all the other things you need to remember that it’s difficult to actually recall when you need to. This is where real life education and what’s actually taught in school start to diverge.
You actually know more than you give yourself credit for. For all our new hires, I teach a class on Intro to 401ks. I begin by finding out how much my students actually know. Turns out, all the basics are normally covered.
• It’s a retirement account provided at work.
• Money is taken from your paycheck pre-tax.
• Sometimes there’s a match.
• Your money goes into mutual funds you can manage.
There you have it. It’s the simple basics that are easy to understand and true in most circumstances. Are there differences? Yes. Are these overgeneralizations? Probably. However, there’s one unmistakable truth: Saving at work provides more benefits than your savings account and could result in free money.
As you’re out there entering the workforce, get to know your benefits. Much of our economy comes from small businesses. If your new job doesn’t have a 401k, ask them to start one up. This is the benefit that keeps on giving directly to you.