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Why Deductions Are Good for You!

You want as much take home pay as possible, so sometimes seeing all of those deductions hurts. But those deductions are actually good for you. Yes, they mean less money now, but they are setting you up for a better financial future.

Deductions taken out to go into your retirement plan are a gift to yourself that you will be thankful for in the future. And if you’re a part of a matching program, remember that your employer is actually multiplying part of this money.

Deductions to pay your medical and dental insurance premiums are good because they are generally taken out pre-tax (which means you don’t pay taxes on that income) and also mean you are a part of a group plan that costs far less than what you would pay on the private market. If you have this deduction, you’re lucky to have an employer that offers benefits.

Deductions for tax payments probably hurt the worst, but think about it this way: your employer is making these withholdings on your behalf, which means you don’t have to think about it. Independent contractors have to make payments themselves on a monthly or quarterly basis out of their own pockets. Just think if you had to write a check every few months?

So when you look at your paystub and see all of those deductions, don’t fret! Remember that they are saving you time and money on things you’d be paying for anyway.


To Recap


    • Take the money – it’s free! (401k match)
    • Review your deductions every year and adjust as necessary
    • Automatic deductions make saving painless
    • As your life changes (marriage, babies, divorce) assess your deductions