When you enter the workforce: What now?

Navigating your different choices

As you begin your professional journey, you may not be familiar with many of the terms associated with income, the different types of compensation and their outcomes.

Something you may be faced with is negotiating compensation, including equity or additional benefits, like extra vacation days — particularly as companies find creative ways to compensate employees in competitive industries.

Questions to keep in mind:

• Are you paid hourly or on a salary?
• Do you receive paid overtime, bonuses or commissions?
• Do you receive any equity or options?
• Is your compensation performance or metrics-based?

For more on income, read the basics of a paycheck.

Understanding the big picture

Taxes can be complicated. As you start in your first full-time job, you’ll have to make tax-related decisions, like completing Form W-4 for tax withholding.

It's important to understand how taxes and withholding work in relation to your holistic financial picture. Consider consulting your tax professional about your compensation, to avoid errors like underpaying or over-withholding taxes.

You might not be aware that you can update  your tax information with your employer at any time, like if you were to get married or have a baby.

Questions to consider:

• What is income tax and how does it work?
• Why is it important to pay taxes accurately?
• How do expenses and deductions work?
• How should you approach refunds and deficits?

Here’s more about the basics of income taxes.

Bank of America Private Bank does not provide tax or legal advice.

Emphasize starting early

Understandably, many young adults like yourself starting their first job aren’t considering retirement plans;however, investing now can lead to long-term rewards.

Many employers offer retirement plans and incentivize employees to participate with contribution matching. While opting in to an employer’s plan may ultimately be the best option for you, consult with your advisor before signing. You could have access to Bank of America Private Bank privileges and accounts that may be a better fit than the plan you are offered.

Questions to consider:

• Do you know the difference between retirement plans and savings accounts?
• Do you know the benefits of the different types of retirement accounts?
• What type of retirement plan does your employer offer?
• Does your employer match contributions? If so, to what amount?

For details on how retirement plans work, see the basics of retirement accounts.