 Hi guys, my name is Nika. Thank you so much for tuning back into my channel. If you haven't subscribed yet, make sure you subscribe. On this channel we're talking about all things finance and all things beauty because we're multifaceted human beings and we're very vested in both. Okay, so in today's video we are talking about personal finance. In particular, what the fuck is a 401k? So I have done a shit ton of research about 401ks because what the fuck is it? Everyone's talking about it. You get hired at any company and they're like, here are all of our fancy benefits and our 401k vesting and our percentage match and our profit sharing and just all these financial terms that like I really didn't understand. So I did a lot of research. I read a book, then I read another one and another one and another one until I felt super confident and super comfortable to make my own decisions when it came to investing. And that's essentially what 401k is. So our 401k is investing in your retirement. The name essentially comes from the internal revenue code that allows employers to give their employees retirement accounts. So essentially if you're working for a huge corporation and you're a full-time salary employee, this should be a benefit that is available to you. If you are working a part-time job or if you're in a contract role or if you're just you know on an hourly salary this may not be offered for you by your company but never fear there are other options to save for your retirement account. I will link that video up here to be completely honest. I haven't made that video yet but once I do it will be here. You can find out more about those. Those are called IRA accounts and there's many different types and it's a whole another video but for this video sorry that is my cat. He gets very active when I started making these videos but for this video we are talking about 401k's. So essentially what a 401k is is an investment account your company sponsors. So they use them as a tool to be really competitive with other companies. So for example if you are making a hundred thousand dollars your company may offer to match 6% of your investment of your salary into your 401k. So that would mean for every 1% you invest your company will also match 1% of your salary up into that 6% and so that is what's most commonly done and it makes it really advantageous for employees because it's essentially free money. Like if you're not investing you're missing 6% of free money that your company is willing to offer you for free. So it's a no-brainer. You have to do it. It's free. There's also a catch usually and this is the way companies are able to retain employees. It's called a vesting schedule. So they know what a vesting schedule is. It's essentially they will match that you know 6% for example but they will only allow you to walk away with it once it's a hundred percent vested which usually comes in a period of years. So maybe your first year it's 25% vested your second year is 50% vested your third year it's 75% vested and then after you have spent four years at the company all that beautiful free 401k money is 100% vested and it's completely yours if you ever leave the company. But you definitely definitely definitely need to check out. I'm busy. I'm doing stuff. Say hi to the people. Say hi. Say hello. I love him. I'm not gonna kiss you because I have lipstick on. Okay. We're talking about vesting schedules. So yes after you've been in a company for four years you may be able to walk away with a hundred percent of that money that you put in your IRA account vested which is ideal. So a lot of people will start working in companies but won't leave until you know that two three year whatever their personal vesting schedule is in order to make sure they're not leaving any money on the table. And so every company is different. When you get hired a new company or if you're working at a company right now and you know you have a 401k benefit but you're not exactly sure of the terms make sure you walk downstairs you know knocking your age knock knock knock knock knock knock knock knock knock knock. knowing yo hr department store and say hey like I have questions about my benefits that's essentially their job they're supposed to make sure that you have the knowledge and you feel comfortable kind of speaking to what your own unique company is 4 oh 1k benefit is so it can come in profit sharing meaning that you know for example you may not have that percentage match but they may give you a one percent of whatever profits they make in a year. You can have matching so typically companies will match 50% of like your 6% or 100% of your first 6%. I say 6% that's a random number that I've made up but every company is different so just make sure you kind of know your details know your numbers number one wrong personal finance and then lastly you know that vesting period so some companies have no vesting period some companies as soon as you started matching in your 401k you're able to walk away at any point in time with all that money other companies use it as a tool for retention so you know after two years maybe you only get 50% or after four years you get 100% or maybe after two years you do get 100% but you just have to ask the question and you have to find out for yourself. The biggest benefits of having a 401k is tax. You don't have to pay taxes on money that you're putting into your 401k which if you're saving a lot of money could potentially put you in a lower tax bracket and save you money on taxes. You only pay taxes on money once you take it out of your 401k and typically you're not supposed to do that until you're 65 plus. If you do do that before you turn 65 then you have to pay a penalty which nine times out of ten is not worth it so please invest in a 401k it's a retirement plan save that money don't think about it just don't don't do it honestly a rule of thumb is to save between five and ten percent depending on what you can afford in your IRA account and your 401k account and yeah so if you have any other questions let me know feel free to leave a comment below make sure you subscribe for more personal finance tips and also beauty and makeup tips if you guys are into that is there an overlapping audience I'm not sure but it overlaps in me so hopefully it overlaps in you too anyway my name is Nika I will see you guys later make sure you subscribe for more videos and yeah love you guys