This post is sponsored by Lexington Law.
Starting a new job can be overwhelming. From navigating the office culture to getting to know your coworkers to learning how to best communicate with your boss. But, perhaps the most confusing part about your first “real” job is understanding the huge pile of paperwork you need to complete.
I remember blankly staring at it all and not knowing what to complete first, what boxes to check or if I was even making the right financial decisions for my future. I was not prepared for this first adulting step and don’t want you to feel the same way.
Here’s a checklist that will help you navigate the process and not miss enrollment deadlines.
Complete your W-4.
The W-4 is your key to getting paid and if you don’t fill it out you won’t be on payroll. You should bring your passport on your first day on the job as your employer will need to see it for verification. You’ll notice that you will be asked for the number of allowances. The number you choose will affect your paycheck, tax liability, and tax refund.
The more allowances you claim on your W-4 the less taxes will be withheld and your paychecks will be bigger, but it will lead to a smaller tax refund or you potentially owing money come tax time. On the flip side, the fewer allowances means your paycheck will be smaller but you might get a larger refund and have less of a tax liability.
If you’re a single person with no dependents, living on your own and have one job, you will most likely be writing “1” as your allowance on line A and line D. This option will most likely give you a tax refund while taking out the necessary taxes per paycheck.
When you get your first paycheck, you want to double check that you have the appropriate taxes taken out. If not, you can reach out to your human resources representative to update the form.
Enroll in a health insurance plan.
Depending on your employer you may have a variety of health care plans to choose from and each has a different deduction from your paycheck. It’s important to review these options thoroughly because you want to not only find a plan that covers your needs but one that is within your financial means.
Some areas to review when considering your plan include:
- Your current health and healthcare needs
- Cost of prescription medication
- Copay (primary and specialist)
- In network versus out of network
- Emergency room fees
Many employers also separate medical care from dental and vision. You will want to look at these options separately, add up the cost per paycheck, and make sure you sign up for all of the appropriate plans. Often, this is the only time you can claim one or all of these plans until open enrollment the following year.
Review additional insurance plans.
In addition to your health insurance, your company might offer short term disability, long term care insurance or life insurance. You will want to look at these options and the costs associated with them. One to pay close attention to is life insurance. Many companies have several levels where you’re covered for various multiplications of your salary. Take a look at the offerings and talk to those closest to you to determine a plan that’s most appropriate.
Put aside money for your flexible spending account.
One way to save some money is by putting aside pretax dollars into your flexible spending account. You can designate a set amount per paycheck to this account but be aware that what you don’t use you can potentially lose. Only $500 per year can roll over to the following year.
This account can be used for medication, doctor’s visits, or medical procedures helping save you money throughout the year. To determine if this is a good option for you, look at your medical bills over the past year and see what you typically went to the doctor for. Do you always get sinus infections and require medication or do you have an upcoming procedure that you need to save money for? Signing up for a flexible spending account is only available within the first 30 days of starting your job or during open enrollment and can really help you save money on medical expenses.
Enroll in a retirement plan.
Enrolling in a retirement plan is crucial when you first start a job. Most companies match what you contribute or at least make a sizeable contribution on your behalf leading to free money. Some organizations contribute right away while others have a vesting period. Make sure you check your documentation to understand your company’s policies. There may also be a variety of options to choose from, here is a brief overview of what you might see:
- 401k: These accounts are typically offered by companies and allow individuals to contribute on a pre-tax basis. This means more money you can invest in your account. A 403(b) plan is used by religious organizations, nonprofit companies, school systems, and government while a 401 (k) is used by for-profit companies.
- IRA: There are two types of IRAs: (1) a Traditional IRA and (2) a Roth IRA. Both are retirement options available for individuals that can be used in addition to another retirement plan or be your primary plan. Each type of IRA has differences regarding income limits, tax incentives and withdrawal rules, so you should research which plan works best for your situation.
Review additional benefits.
When I was working in the city, my organization offered commuter benefits. I could get discounted train tickets, parking and bus tokens which saved me a ton of money. Many other companies offer similar options and other discounts for local restaurants, movie theatres and other excursions. Ask your human resources representative to see if there is a list of additional options you can choose from. You might be able to save money on things you never expected.
Reviewing this paperwork can be extremely overwhelming but know your company is there for you to help you throughout the process. If you have any additional questions, now is the time to ask to make sure you complete it on time, correctly, and don’t miss out on any opportunities that can save you both money and resources in the future.
If you’re looking for additional finance resources, Lexington Law has an extensive blog section on their website. They have articles on anything from credit repair to getting out of debt on their blog and you can see Lexington Law reviews.