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Veterinary Team Benefits – Free Money

March 15, 2017

FREE MONEY TO TAKE TO THE BANK!

Money is a tool and managing it wisely is a good choice. Image by © Royalty-Free/Corbis

Money is a tool and managing it wisely is a good choice. Image by © Royalty-Free/Corbis

The following information can also be viewed in a 10 minute video “Free Money” at the end of the Blog.

How much money have you left on the table over the years? How much money is your employer offering you that you are not taking advantage of?

I am baffled by the employees that do not take advantage of FREE MONEY that is offered in the form of 401-K matching or other team benefits. If you consider compounding interest in the equation, veterinary team members have left thousands of dollars on the table!

In an employer matching program, an employee typically receives a contribution from an employer if an employee makes a contribution towards their own account. Employer matches vary from company to company. The general contribution from an employer is usually 3% to 6% of an employee’s pay (can be determined each paycheck).

Compounding Interest

Compounding interest can work for you or it can work against you. The choice is yours. The “time value” of money is relatively simple. It is called the Rule of 72. The Rule of 72 is the time it takes to double your money when an interest rate is applied to it. Simply divide the interest rate by 72. For example, 72 divided by 3% compounding monthly (average interest on a Certificate of Deposit) will take you 23 years to double your money. If you were to get 8% interest on your savings it would take 9 years for you to double your money.

In the September 2007 issue of Firstline, Fritz Wood, CPA, CFP gave great advice in his article Plant the Seeds for a Healthy Financial Future. Fritz explains that an investor who starts saving at the age of 32 will have a far more difficult time accumulating money for retirement than an investor who starts at age 22!

  • An investor who starts saving at 32 and contributes $100.00/mth to a Roth IRA will have $340,000 at the age of 65, assuming she earns 10.4% (long-term average of large company stocks).
  • An investor who starts at 22 and contributes $100.00/mth to a Roth IRA will have $980,000! A quantum difference!

8 Simple Rules of Successful Investing  (article from Firstline 2007)

1.     Start small – $50 to $200 each month
2.     Start NOW – whether young or more mature
3.     Pay yourself first – at the beginning of the month, or as the first thing in your budget
4.     Invest regularly – work with direct deposits
5.     Let Uncle Sam help – deductions before taxes and tax deferred
6.     Diversify broadly – educate yourself on mutual funds
7.     Adopt a long-term perspective – long haul attitude
8.     Invest frugally – identify your retirement date

Money is a tool and managing it wisely is a good choice. Ask your employer about opportunities for investment with compounding interest which will help you obtain your financial goals.

Resources

Ask Shawn, Help! I will never be able to retire on my hourly wage, Firstline video, July 2015, https://veterinaryteam.dvm360.com/ask-shawn-help-i-ll-never-be-able-retire-my-hourly-pay
Could you Retire with a Million Dollars? Phil Zeltsman, DVM, Veterinary Practice News, August, 2012, https://www.veterinarypracticenews.com/Vet-Editorial-Blog/Cutting-Edge/August-2012/Could-You-Retire-With-1-Million/
How I Helped a Technician Become a Millionaire, Phil Zeltzman, DVM, Veterinary Practice News, September, 2011, https://www.veterinarypracticenews.com/Vet-Editorial-Blog/Cutting-Edge/September-2011/How-I-Helped-A-Technician-Become-A-Millionaire/
Plant the Seeds for a Healthy Financial Future. Fritz Wood, CPA, CFP. Firstline. September/October. 2007