By Dee Lee

BOSTON (CBS) – If you just got a job, there is some tax planning you can do. And even if you are doing landscaping or waitressing until that marketing job comes thru planning is still helpful.

Best tax planning a new grad can do with their first job is begin put money away in their employer’s retirement plan. No income tax is paid on the contribution and the money will grow tax deferred until you retire 45 years from now.

I know it’s the last thing on your mind with $37,000 in school debt, which is the average school debt. But I promise you will be glad you did. If they offer a company match and many companies do, at least contribute enough money to take advantage of the match. It is free money.

Review the paper work that comes with the new job. The employee handbook is a good read. Know what your benefits are. Sign up for the health care offered. You may find other freebies in there like a gym membership.

Your first paycheck may come as a surprise. Your employer will deduct your Social Security and Medicare contributions, your Massachusetts and Federal taxes, your contribution to the 401(k), your share of the health insurance costs, and the cost of any other benefit you signed up for.

Once you know what your paycheck will look like set up a budget. A reasonable budget will have savings and fun both in there.

Next, your school loans. Payments won’t start until 6 months after graduation and you will be eligible for a deduction on the interest you pay. Take advantage of this grace period to save some money for an emergency fund. But remember that those payments will begin in a few months.

Review the loans and the interest rates you will be charged. There are consolidation and student loan refinancing options available that help lower the interest rate or the monthly payment.

You may be able to deduct up to $2,500 of the interest you paid on student loans on your federal individual income tax return. The deduction is not limited to government-sponsored loans, but does not apply to loans from family members. And as with most tax rules if you make too much money the deduction will go away.


You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee’s Money Matters newsletter here.


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