There is no denying that there is no better feeling than receiving that paycheck. This is especially true if it is your first one. You’ll be filled with feelings of entitlement, intrigue, and a bit of confusion as well. Some of that confusion will probably come from those deduction, symbols, and notations that you have no idea about. That’s okay because you’ll figure these things out soon enough. What’s important right now is that you don’t want to end up looking at your check and wondering what happened to all the money. You don’t want to be in a position where you haven’t paid a single bill and you’re already down 25% or more. This is why you need to learn to be the most effective possible with your check. And, you can do that by taking advantage of the following tips and information.
Adjust Tax Withholding
Any time you start a job you going to be required to fill out a W-4 from the IRS. There will be various questions on this form, but one of the most important is the withholding section. This is where you’ll get to choose how much your employer holds of your wages for tax purposes. The form might also ask how many allowances you wish to claim. The higher number of allowances, the less that will be withheld from the check. Less withholding, more money in your pocket. Makes sense, right? Sure, it does. It’s easy enough, but here comes the tricky part. You can withhold so much that you might end up paying back in when tax season rolls around. This is something you do not want! Make sure you do your calculations right so you can avoid this. Seek help if necessary.
Do Your Calculations
Speaking of calculations, you’ll always want to make sure that you are regularly reviewing your stubs to make sure that you are only paying for what you intended to pay for. It’s not unheard of for companies to withhold a small amount of money for a charity or something similar. It is possible that you may have inadvertently agreed to this withholding by missing some of the fine print. If your wages are being garnished to repay a debt, child support, or something similar, you’ll want to double-check this as well. Once again, it is not uncommon at all for these financial institutions to make a mistake. Luckily, if there is a mistake, you will be refunded, but there could be a waiting period. For more information and tips like this one, click here.
Update Your 401k
Did you know that your contributions to your 401k are not taxed at the time of the contribution? What does this mean? It means that what you elect to put into your 401k is deposited without the government touching it. They can’t take out taxes or withhold anything from it. Not only this, but it is likely that your employer has some kind of 401k contribution program in place where they’ll match your contributions. You could get nearly $0.50 for every $1 that you contribute. That’s pretty much free money right there going towards your retirement.
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