1. Fill out your W-4 form correctly

First up, make sure you pay your taxes, but don’t overpay.

The W-4 form is one of the first pieces of paperwork you’ll be asked to complete when you get to your new job. The W-4 tells the employer how much of your paycheck you would like to withhold for income tax.

“Failing to withhold enough money for taxes can lead to an unpleasant surprise next tax season,” said Ron Strobel, a CFP at Nampa, Idaho-based Retire Sensibly. “Withholding too much means you will receive a big refund.” While you may like the idea of getting a big sum of money after filing your taxes, consider what you could have done with the money. “The IRS doesn’t pay interest on refunds, so receiving a refund means you missed out on earning interest over the course of the year,” Strobel said, referring to investments you could have made if you hadn’t over-withheld.

The “unpleasant surprise” Strobel mentioned is a tax bill from the IRS for unpaid taxes. If you don’t have the funds on hand when you get the bill, you may need to set up a payment plan with the IRS or borrow to cover the tax debt. Either option isn’t ideal. The IRS charges interest on balances not paid by Tax Day, and you’ll also likely have to pay interest on any money you borrow to pay your tax bill.

If you find the W-4 confusing, you can use this withholding allowance calculator on the IRS website to help you figure out how much you should elect to withhold for income tax. We also have an article on MagnifyMoney that explains tax withholding changes for 2018.

You will generally be asked to return your completed and signed W-4 to your employer’s human resources department as soon as possible to avoid delays with your first paycheck.

2. Contribute to retirement savings

Another thing you’ll probably be introduced to during the onboarding process for your new job is your employer-sponsored retirement account if the company offers one. Experts we spoke with recommended you set your retirement contribution to 10% of your earnings.

But a 10% contribution right out of the gate might not be the most useful advice for someone in their early 20s, said Sean Gillespie, a CFP and co-founder of Virginia, Va.-based Redeployment Wealth Strategies.

“Don’t get stuck on 10%. It’s a nice rule-of-thumb number, but it’s a number that can intimidate a lot of young’uns so they won’t save at all,” said Gillespie. He noted new workers with student loan debt might be on a tight budget, so they may not even be able to save a full 10% of their salary and cover their bills.

“Let’s figure out how to put something away. If you can’t do 6% because you have to eat, let’s start with 3%, and let’s see if we can bump it up 1% next year,” said Gillespie. He added that getting started is more important than the amount you save at first. “Even if it’s like $50 a month, try to establish the habit.”

Our Ultimate Guide to Maximizing your 401(k) has some awesome advice you can use to make sure you make the most of your retirement account. The experts we interviewed also provided a few tips:

Tip #1: Max out the match
If your employer offers to match your contributions, you should aim to at least maximize the match, advise the experts.

Every penny your employer matches can be described as a 100% return on your investment up to the match limit. Or you could think of it another way:

“This is part of every penny that you’ve been promised as part of this job. If you don’t contribute, you are giving money back to your employer,” said Gillespie.

Tip #2: Take advantage of a Roth
New York City-based CFP Sallie Thompson said she advises young workers to contribute to an employer-sponsored Roth 401(k) or Roth Individual Retirement Account (IRA) if they have the option.

Contributions to a Roth account are made using after-tax dollars. As a result, you can take out the contributions and earnings tax-free once you reach the eligible retirement age.

You may be in a higher tax bracket when you are older and earn a higher salary, so getting taxed now means you may get to keep more of your money.

Tip #3: Max out the annual contribution limit
If it’s within your budget, the experts advised maxing out the contribution limits to your retirement accounts.

Employee contributions to a 401(k) are capped at $18,500 in 2018. The limit will rise to $19,000 for 2019. Those 50 and older can still contribute up to an additional $6,000 as catch-up contribution. The limit applies to individuals, not accounts, so if you contribute to more than one 401(k), your overall cap in 2018 is $18,500. The limit does not include the employer match.

The IRA contribution limit for individuals in 2018 is $5,500. The limit is $6,000 for 2019. Again, the same limit applies if you have more than one IRA. Employers cannot match contributions to traditional or Roth IRAs.

3. Insurance coverage

Your employer’s benefits package may include a variety of insurance options, including health insurance, life insurance and disability insurance. Taking advantage of what’s offered, but first, evaluate if the plans suit your needs.

Tip #1: Opt for an HSA and high-deductible health plan
If you have the option to use a Health Savings Account (HSA) in combination with a high-deductible health plan, you should, said John Gugle, a Charlotte, N.C.-based CFP.

“While you are young and healthy, a high-deductible health plan can save you money in monthly premiums. An HSA is the only investment vehicle that has a triple tax benefit,” said Gugle.

The contributions are tax-deductible, the money you invest grows tax-free and any funds you withdraw to cover qualified future health care expenses can be taken out tax-free.

“Let this account grow and use cash flow for health care expenses. The longer this account can grow tax-free, the better,” Gugle advised new workers.

Thompson echoes this advice and suggested workers aim to use the funds to cover medical expenses in retirement. Thompson recommended workers invest their HSA contributions into good growth mutual funds for the long term.

Tip #2: Get disability insurance
Your employer will likely offer disability insurance. If they don’t, try and find a policy from a private insurer. The coverage is very important to have, as it protects your largest asset: your future income. Disability insurance ensures you can keep paying your bills and put food on the table in the event you become disabled and are unable to work for an extended period of time.

MagnifyMoney has a complete guide to disability insurance here to help you weigh your options.

Tip #3: Consider term life insurance

If you choose to get a life insurance policy, Gugle recommended signing up for term life insurance, as opposed to a whole life insurance policy.

In a nutshell, term life insurance policies cover a fixed period of time and are generally more affordable for young workers on a tight budget. Whether or not you need life insurance at this stage in your life depends on if you have financial dependents. We explain in more detail the major differences between term and whole life insurance here.

When you are designating beneficiaries on your insurance policies, be sure to designate both a primary and contingent beneficiary.

1. Write down your financial goals

“It’s a great time in your life to start a discovery process about what is important to you and the lifestyle you want to build for yourself,” said Kayse Kress, a Bristol, Conn.-based CFP, referring to the first years in the workforce. “By outlining financial goals, you can create an action plan using your money to accomplish those things.”

Your goals and when you intend to reach them may change as you go through life, and that’s fine. You can revisit the list annually or how often you deem necessary.

Here are a few questions to help you get started with that list:

• When do you expect to pay off your student loans? What will you do with the extra money?
• How often will you go on vacation?
• Do you want to own a home or a rental property one day?
• Are you planning to have a wedding?
• Do you want to start a business?
• When do you plan to retire, and how does a retirement lifestyle look for you?

Full-fledged financial planning likely isn’t necessary at this point in your life, since you may not have much in your asset column. However, if you have assets or merely want some guidance, you may want to meet with a financial planner on a one-time or once-a-year basis to help you set appropriate goals and prepare to reach them.

2. Create and follow a budget

The most suggested tip experts shared for new graduates joining the workforce was to master “cash flow management,” or budgeting.

“Budgeting is not as painful as people think and actually allows you to spend your money in meaningful ways, while also helping you make sure to live below your means,” Kress said.

Your budget categories

To get started with basic budgeting, list your monthly expenses and sort them into larger categories. For example, you might label them savings, fixed expenses, flexible expenses and debt.

You can automate your savings by having retirement contributions deducted from your paycheck or setting up recurring transfers from your checking account to a savings account.

“I’m a big fan of automating because it makes life so much easier,” said New York City-based financial planner Samuel Deane. “It really takes the stress out of budgeting.”

Your fixed expenses are the nonnegotiables, like your rent or mortgage payment, groceries, your car payment and utility bills. The debt category includes required monthly payments on things like student loans and credit cards. The remainder of your monthly expenses would likely fall into the flexible expenses bucket. Flexible expenses are things that are “wants,” like ordering takeout, your subscription payments and Uber rides. The flexible bucket is the first place to start when you need to cut your spending.

Practice and review periodically

Once you create your budget, try to stick to it. Monitor how you’re doing so you can make adjustments. Thompson recommended comparing your actual spending with your budgeted figures on a monthly or quarterly basis.

3. Build an emergency fund

Your top savings priority should be setting aside money for an emergency, like losing your job or urgent car repairs you need so you can continue driving to work. These funds serve as cushion so you don’t have to turn to expensive borrowing options.

Experts generally recommend saving three to six months’ worth of expenses in a savings account, where you can quickly access the funds when needed.

“It should only be used for emergencies. If it goes below the specific amount, it should be replenished,” said Thompson. “Use a payroll deduction to fund this or set up automatic transfer from checking to savings.”

4. Prioritize paying off debt

A recent study by LendingTree, MagnifyMoney’s parent company, found that millennials in the largest 50 U.S. cities carry an average $23,064 in non-mortgage debt.

“To get started on your path to financial independence, it is important to start paying down any debt that you have ASAP,” Kress said

Paying money toward interest on debt means it may take you longer to reach other financial goals because you have less money to allocate. If you have debt, do your best to tackle it as quickly as possible after fully funding your emergency fund.

Using a strategy like the debt avalanche or debt snowball may help to organize and speed up your debt payoff. In addition, you may be able to save money by consolidating your debt with a personal loan or balance transfer credit card.

5. Make sure you understand your student loan terms

If you have student loan debt, your first bill may be coming soon, as first payments are often due about six months after graduation.

“Without a student loan payment you will feel rich when that paycheck hits your account, and you’ll likely have to urge to splurge,” said Michael Troxell, an Oakland, Calif.-based CFP. “But you may be filled with some regret down the line when you see your student loan bill.”

Start preparing to make the payments as early as possible. If you haven’t already received repayment information from your student loan servicer, you can log into the Federal Student Aid website to get more information on making payments. You can read more about dealing with education debt in our ultimate guide to student loans.

6. Work on your credit score

Establishing good credit early on is key, as a high credit score can help you qualify for new credit at better terms. This is especially important if you ever want to borrow money to buy a home or car. Using a credit card responsibly will help you build good credit.

The simple act of paying off your card each month helps you build positive history in the two areas that contribute to about 65% of your FICO credit scoring calculation: on-time payment history (35%) and credit utilization rate (30%). Your credit utilization rate is the amount you use of your total available credit. Using less of your available credit and making consistent, on-time payments demonstrate to creditors you are a responsible borrower who will pay back a loan on time. The habit should help to build your credit score over time, but it’s not the only thing you can do to help increase your score. MagnifyMoney has a few more credit building tips here in our credit scoring guide.

7. Build a habit of thrift

Gillespie suggests those new to the workforce “build the habit of thrift.” That doesn’t mean to shop exclusively at thrift stores, but in a more broad sense, the habit of thrift relates to keeping both your fixed and flexible expenses low.

For example, if you have the opportunity to save money by living with a roommate or living with your parents, do it.

“Adopt the mentality of minimalist,” said John Pak, a Los Angeles-based CFP. “Build the habit of spotting lower cost options or alternatives. Consume more of what you need and minimize what you want, at least until you start seeing extra money left over each month.”

Deane said 20-somethings often make the mistake of believing money is something they should inherently know how to manage, when it isn’t.

“You don’t necessarily know as much as you think you do,” Deane said. “You have to make the effort to go out and seek the information,” Deane told MagnifyMoney.

To that end, the information is out there. You can apply some of the tips you learn from the internet, books, other people and financial experts to your lifestyle, and see what works for you. Every budgeting strategy doesn’t work for every personality. Try not to get discouraged if you falter a few times before you get the hang of things. Just try to learn from your past mistakes and make changes for the better.