When you’re just starting your career, you’re probably not thinking about retirement or life insurance. After all, you’re young and retirement is decades away. In the meantime, rent is due and student loan bills may have started arriving.

But now may be the ideal time to start saving for retirement and to take advantage of compounding interest in a tax-deferred retirement plan. Also, being younger means potentially lower life insurance rates, and your expenses are likely to be higher once you have a mortgage, kids and other financial obligations.

Here are three things you should consider doing now.

1. Contribute to a retirement savings plan

If your employer offers a 401(k) plan—or a 403(b) if you work for a nonprofit or government agency—sign up for it. Even a few dollars per paycheck can add up over time. Best of all, you’ll have the power of compounding interest. You earn interest not only on the money you put in, but also on the interest it earns. The earlier you start, the more compounding interest you can accumulate. Calculator: How does your money grow?


If your employer wants to give you money, why not say yes?


Many employers will match a portion of the money you put into their retirement plan. For example, for every dollar you contribute, they might add 50 cents. The matching contribution varies by company and usually has an annual limit based on how much of your salary you put in. But if your employer wants to give you money, why not say yes?

The money you put into your 401(k) plan, along with anything your employer contributes, is tax-deferred. It’s taken from your paycheck before income tax is calculated, and you won’t have to pay taxes on it until you withdraw it.1 So, by contributing to a 401(k), you’re not only saving money for your future retirement, you’re also saving on your current income taxes. Calculator: Am I saving enough for my retirement?

2. Look into life insurance

If you’re young, healthy and don’t have kids, you may think you don’t need life insurance. But if you die unexpectedly, people you love could face not just an emotional loss, but a financial loss as well.

If you’re like most college grads, you probably took out a loan to pay for school. If your parents co-signed your student loan from a bank or other private source, they could be on the hook for the full balance if you suddenly pass away. The same goes for any car loans or credit cards they may have co-signed.

Perhaps you’ve found “the one.” If you have a spouse or a significant other who depends on your income, your death could leave them unable to cover the bills on their own.

Even if you’re debt-free and single, your family and loved ones will probably want to honor your life with a funeral. Funerals are expensive—$8,000 to $10,000 on average2 according to Parting, a funeral home comparison website.

Term life insurance can help. It is the simplest type of life insurance, and it lasts for a limited amount of time—typically 10 to 30 years. If you die during that time, your beneficiary (parent, significant other, spouse—whomever you’ve named) collects the payout, called a “death benefit.” The death benefit is usually paid in a lump sum, and your loved ones generally don’t owe federal income taxes on it.

In most cases, it’s cheaper to buy life insurance when you’re young and healthy (because you pose less of a financial liability to the insurance company). And, with term life insurance, the premiums usually stay the same for the duration of the coverage. So it may make sense to purchase it sooner than later—when you’re older and likely to face higher rates. Many employers also offer low-priced group life insurance as a benefit. Be sure to take advantage if you’re looking for coverage. Calculator: Life insurance planning

3. Find a qualified financial professional

Now that you’re pulling in a regular paycheck, you might be wondering what to do with that money. A financial professional can help. They can talk with you about your goals and can help you navigate investment options, tax laws and other complex financial stuff to help you stretch your dollars.

When it comes to your money, it’s important to find someone you’re comfortable with. You’ll be sharing your most intimate financial info with them (the responsible and the regrettable), and you need to like them enough for that level of total honesty.

So how do you choose a qualified financial pro? Your local bank or brokerage firm is a great place to start, but it’s even better to ask around. A personal referral from a friend, relative or co-worker can put your mind at ease. Or, if your company offers an Employee Assistance Program (EAP), see if it can refer you to a financial expert.

This is an exciting time in your life, as you start your career and set your own path. It’s also a great time to make some smart financial moves that will prepare you for what’s ahead.

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