Starting your first job can be both an exciting and challenging time. First, it's rewarding to finally be earning your own way in the world after years of schooling and careful preparation. It's also challenging because you want to make sure you get the maximum return for your hard-earned money.

Time is on your side
Many first-time jobholders focus their concerns on current needs and purchases - such as housing, transportation, food and clothing. Often, feeling time and youth are on their side, they concentrate more on these needs and purchases and give scant thought to investing for their future. After all, retirement is 30, 40, even up to 50 years away. But there's no better time to begin saving for retirement than when you first start working. Why is that? Because of those very reasons mentioned above - time and youth are on your side!

With time on your side, it takes a smaller regular investment to build a retirement nest egg. With time on your side, this investment has more time to grow and to weather and overcome any adverse financial situations, such as an economic downturn or recession. With youth on your side, you have fewer obligations that require significant portions of your paycheck - mortgage, children, etc. - and can devote a larger share of your earnings to savings.

For example, if a 25-year-old investor had contributed $200 a month (actually $267 a month in pre-tax contributions) to an employer-sponsored tax-qualified retirement plan for five years, and assuming an 8% annual return, by age 65 plus seven months that investor's outlay of $12,000 would have grown to more than $300,000!

If that person hadn't started investing until age 35, he or she would have had to invest $200 a month ($267 a month pre-tax) for 15 years - an outlay of $26,000 - to reach the $300,000 goal.

But a 45-year-old investor would have had to contribute $65,800 to accumulate the same $300,000 - and would have reached that goal until age 72 plus five months! That's how costly procrastination can be.

This example is hypothetical, does not reflect the return of any specific investment and is not a guarantee of future income. Fees and charges, if applicable, are not reflected in this example and would reduce the results shown. Income taxes are payable upon withdrawal. Federal restrictions and tax penalties may apply to early withdrawals.

You're ready to start saving
So you've settled in comfortably at your first job and you're convinced of the need to start saving early - now what do you do?

• Determine a personal budget. Figure how much you will need for such basic needs as shelter, food, clothing, healthcare and transportation. Don't forget to factor in optional expenses such as entertainment and vacations. Resist the urge to spend 100% of every paycheck on luxury items. Then calculate how much you can comfortably afford to save on a monthly basis for emergencies and future expenses, such as retirement - the more the better.
• Analyze your paycheck to compare saving in a taxable account to saving through a tax-qualified or tax-deferred retirement plan.
• Find out if your employer offers a retirement savings plan , whether it's a 401(k), 403(b), 457(b) or other tax-qualified plan, and enroll in it as soon as you are eligible.
• Contribute regularly and increase your contributions proportionately as your income rises from pay increases and promotions. Where possible, contribute to your employer-sponsored retirement plan via payroll reduction, which not only automatically invests a pre-set amount in your account, but also helps to reduce current income taxes.
• Stay focused on your long-term goals , even as your life changes. Don't be lured off course by changes in the financial markets or by short-term frills and extravagant purchases.
• Revisit your retirement savings plan on a regular basis to ensure the plan is working to meet your financial and savings goals.

You can find out much more information about budgets, retirement, and general financial planning steps in other parts of this website.