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You graduated from college and land your first job. You get your first paycheck. It is easy to think your finally making good money. But that first check is the first step to learn how to manage your money and prepare for your future. Before splurging on a expensive purchase, consider how your spending and saving habits now can impact our future livelihood and eventual retirement. Developing good habits and being responsible with our money now can mean financial freedom down the road. Here are 4 steps to think about.

Pay Down Debt and Create a Budget

If  your a recent grad with college debt, dedicate a large portion of your earnings toward eliminating that debt. Debt can drag on your finances for a long time if you don't get rid of it. Same applies to credit card debt. There is no substitute for planning. Your money will go further if you know how much is coming in, and your watch where it goes.  

Tax Withholding

Employers are required to withhold money from your paycheck for taxes. Consult with your human resources department to discuss how different exemptions can impact your paycheck. Keep in mind that having money withheld from your paycheck is important. You don't want to end up with an expensive tax bill later. But you also want to strike a balance so that you have enough cash flow for  your bills and monthly expenses. Circumstances change, you may also need to change your withholding status. It makes sense to talk to an accountant or tax professional before making these decisions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Health Insurance

Most companies offer insurance benefits that can be deducted from your paycheck. Evaluate your coverage needs for health insurance and chose the plan that works for you. Younger people generally chose high deductible plan since premium is low. Also check if the employer matches health savings account. A HSA is tax advantage account that allows those qualify to receive deductions for contributions. Money saved is qualified health costs grows tax free.

A flexible spending account (FSA) is another option for saving up some tax free cash for medical expenses. But it has restrictions, normally lower savings limit, can't roll over amounts and unable to move to another job.

Someone with multiple health visits might consider more traditional health plan. The monthly premium is higher, but you'll fewer out of pocket expenses.

Your Retirement Fund

Even if you think you're to young or that you don't have enough cash to build a nest egg, now is the time to start saving for retirement. Setting at least 10 percent of your income each month for retirement. Many companies offer to match employee contributions on a group retirement plan. That means your employer will kick in the same percentage you're paying into the plan. That's free money for your post retirement future. don't leave that sitting on the table.

Even if  your employer doesn't offer a retirement plan, you can still save for retirement, You may want to consider a individual retirement account. As you continue to earn money at your new job, figure out what matters to you. Thank to our partnered carrier Met Life for this blog.

  

 

 

 

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