Your first job checklist

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Congratulations on reaching a major milestone. Here are some important things to think about in order to help make this a successful financial start in life:
  • Get out from under debt. Start by beginning to pay back school loans, credit cards and other obligations you accumulated when you were in school and out of work. The sooner they are paid off, the lower their total cost will be.
  • Budget against your expected take-home pay. Be hard-nosed with yourself as you lay out your spending blueprint. If you see that you could be spending more than you make, think about areas where you can cut back. Don't rule out getting a less expensive apartment, getting roommates or trading down from a costly car. Other expenses that could be trimmed include dining out, entertainment and vacations.
  • Start building a cash reserve. Work toward and try to maintain at least six months' worth of living expenses in an easy-to-access checking or savings account. Saving up emergency cash is easier if your financial institution has an automatic payroll savings plan. These plans automatically transfer a designated amount of your salary each pay period — before you see your paycheck — directly into your account.
Some jobs provide opportunities for different forms of insurance:
  • Health insurance should be a first priority. As of 2014, health care insurance is also mandatory under the Affordable Care Act. If you're not covered under an employer plan, look into the new state or national health insurance exchanges, which offer a variety of coverage options and providers to choose from at You may also qualify for a subsidy if your taxable income is within certain limits.
  • Life insurance is a logical step, but may only be a concern if you have dependents.
  • Disability insurance should be another consideration. It could replace a portion of your income if you can't work for an extended period due to illness or injury. If you can't get this through your employer, call individual insurance companies to compare rates.
You are starting your work life today, and some day you will end it and retire. The sooner you start laying the groundwork for that day, the easier it could be to achieve.
  • See if your employer sponsors a retirement savings plan. These tax-advantaged plans allow you to make pretax contributions, and taxes aren't owed on any earnings until they're withdrawn. Some may even offer employer-financed incentives. What's more, Roth-style plans allow for after-tax contributions and tax-free withdrawals in retirement, provided certain eligibility requirements are met. Make sure you take advantage of any possible employer matching opportunities.
  • Consider an individual retirement account. Generally, contributions to and income earned on traditional IRAs could be tax deferred until retirement; Roth IRA contributions are made after taxes, but earnings can be withdrawn tax free upon retirement. Note that certain eligibility requirements apply and nonqualified taxable withdrawals made before age 59½ may be subject to a 10% additional federal tax. Some financial institutions can even arrange for automatic transfers to your IRA from your checking or savings account.
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The material was authored by a third party, DST Retirement Solutions, LLC, an SS&C company ("SS&C"), not affiliated with Merrill or any of its affiliates and is for information and educational purposes only. The opinions and views expressed do not necessarily reflect the opinions and views of Merrill or any of its affiliates. Any assumptions, opinions and estimates are as of the date of this material and are subject to change without notice. Past performance does not guarantee future results. The information contained in this material does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security, financial instrument, or strategy. Before acting on any recommendation in this material, you should consider whether it is in your best interest based on your particular circumstances and, if necessary, seek professional advice.

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