2. Start a non-retirement payroll savings plan.
If you are already maxed out on your 401(k) contributions, or if your employer doesn’t offer a 401(k) plan, you can start a non-retirement payroll savings plan. Just like a 401(k) plan, the money is deducted from your pay, and put into a savings vehicle of your choice.
You can have the money directed to just about any account or investment that you choose. This can be a savings account, money market fund, a mutual fund or brokerage account. It will allow you to save money on an automatic basis. And just as is the case with a 401(k), the money will come out with virtually no action required on your part, and it will be hardly noticeable once you get used to it.
You can also use this method to fund a self-directed traditional IRA or Roth IRA. You can simply have the money deducted from your pay and transferred to the IRA account, where you will be free to invest the money as you choose. And since the contributions will be tax-deductible, you can expect a larger tax refund in the spring.
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