On The Agenda:
Delayed gratification is a difficult skill to master and that’s just as true with financial matters as it is in the other areas of your life. Let’s talk about some instances where you might be faced with a choice of being satisfied now or satisfied later.
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Episode Show Notes:
On this episode of How Money Works, Craig and Jennifer Moser share some helpful hints for mastering delayed gratification so it can help you financially in the future.
Getting some relief on the household budget vs. getting the 401k match
When the budget is tight, it’s tempting to forego contributing to your 401k so that you can bring more money home. Usually, you tell yourself that you’ll start the 401k contributions once you’re making more money.
But the matching funds that your employer contributes to your 401k could be the best possible return you can get on an investment. The money that you leave on the table by not contributing to your 401k and taking advantage of the match can amount to a huge sum of money that could have been yours after years of compounding.
If you don’t save for your future, you won’t have anything there when you get there.
Getting a tax deduction now vs. better tax planning for the future
Contributing to traditional IRAs, 401Ks, and other tax-deferred accounts is awfully convenient at the time that you do it because it lowers your tax bill for that year.
But most retirees today are looking back and wishing that they’d contributed more to a Roth because they now have a tax time bomb on their hands with all of their retirement income being fully taxable.
Starting Social Security at 62 vs. starting later and getting a bigger benefit
After 40 years of working and contributing to Social Security, it’s very tempting to start getting that monthly check as early as possible. But your benefit will be significantly reduced if you do that, so this approach usually isn’t ideal unless you’re planning to die soon. More often than not, you’d be better off waiting and getting a bigger monthly check.
Listen to the full episode or use the timestamps below to jump to a certain section. Thanks for listening.
0:50 – Budget vs. 401k match
4:12 – Compounding interest
6:46 – Tax deductions
10:35 – Social Security
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