Starting your first real job is tough. You’ve got expectations that look nothing like college life, and let’s be honest—no one taught you how to handle adult things like onboarding paperwork. Now it’s time to fill out the forms for your health benefits and 401(k), and you’re wondering, “Why didn’t anyone cover this in class?”

Almost everyone I know—whether it’s their first job or their third—struggles with this part. So don’t worry, you’re not alone. Here are three main things you can do to make sure you’re setting yourself up for success (not stress).

1. Set Up a 20% Contribution Right Away
Start off strong and set your 401(k) contribution to 20% right out of the gate. This helps you hit your company’s match—aka free money. The company match usually ranges from 3% to 10%, depending on your employer and how much you contribute.

When you start early, your compound growth works like magic over time. You’ll likely beat the retirement goals of someone who didn’t start until their 30s. Plus, when you automatically prioritize saving, you’re less likely to overspend that first paycheck (no matter how tempting it is).

Here’s a fun little secret: many companies offer automatic annual increases to your 401(k) contributions. That can be good or bad, depending on how your paperwork is set up. If you didn’t plan for it, your take-home pay could shrink without warning. But if you start at 20%, you’re usually at the cap, and those auto-increases won’t affect you. You can also bump your contribution up to $23,500 for 2025. Anything above that either goes into an after-tax account or back into your paycheck.

Pro tip: Front-load your account! This means putting most (or all) of your contributions in early in the year. It takes some planning and saving ahead, but it’s a total game changer if your monthly expenses are low.

2. Know Where Your Money’s Going: Traditional vs. Roth vs. After-Tax
As you fill out your paperwork, make sure you know which account type your contributions are going into.

• Traditional 401(k): Pre-tax contributions. You lower your taxable income now, which is great if you’re earning more. When you take the money out later, you’ll pay taxes based on your retirement income bracket (which is often lower).
• Roth 401(k): After-tax contributions. You pay taxes now, but your account grows tax-free—and when you retire, your withdrawals are totally tax-free, even if you’re making more money then.

If this is your first job, the Roth 401(k) is a powerful tool. Paying taxes now while your income is lower can make a huge difference long-term.

Now, if you ever over-contribute or have “extra” money that doesn’t fit into your 401(k), it might go into an after-tax account. You can roll this into a Roth later (depending on the rules) or keep it where it is. The cool thing about after-tax accounts is that you can access that money before age 59½, unlike retirement accounts. The tradeoff? You’ll owe taxes on the gains when you sell investments, and the rate depends on how long you held them.

3. A 401(k) Isn’t an Investment (But It Holds Them!)
Here’s something most people don’t realize: putting money in a 401(k) doesn’t mean you’ve invested it yet. A 401(k) is just the container—the tax-friendly account that holds your investments.

Inside that container, you get to pick how your money is invested. Most plans offer funds in categories like Large Cap, Mid Cap, Small Cap, International, and Bonds. You’ll also see a default option, usually called a target-date fund or lifestyle fund.

Target-date funds automatically shift your investments to be “safer” as you get older—meaning more bonds, fewer stocks. The idea is that bonds are more stable and protect your money from market dips, but the downside is they don’t keep up with inflation. So no, choosing the 2025 Target Date Fund doesn’t mean you can retire next year (sorry). In fact, picking one too close to today can slow down your growth so much that retiring ever could be tricky.

Instead, look at your equity exposure (how much you have in stocks) and make small adjustments over time. As you get more comfortable with your 401(k), this stuff starts to feel a lot less intimidating.

Wrapping It Up
Here’s the quick recap:

• Start with a big contribution (around 20%) and increase it every year.
• Choose the right account type—Traditional or Roth—based on what makes sense for you right now.
• Don’t just default to a target-date fund without understanding how it works.

You can change your contributions, account types, and investments anytime. I recommend logging in quarterly to see how things are going. And if you get stuck, talk to a professional—someone like me!

My sister was a teacher at a middle school, and over the years, I’ve been invited to speak to her students about money. Here are the best ways I’ve found to convey these concepts:

Compound Interest
One of the most important topics I discuss is compound interest and how it can positively affect you, even with a simple investment like a savings account. We talk about different types of savings accounts and why it’s important to research the institutions you choose to invest with. I introduce three main types of savings accounts: 1-year, 2–5 year, and emergency savings. It’s crucial to build an emergency fund before moving on to short- and long-term savings goals. Each account offers different interest rates, ranging from standard to high yield, depending on the time horizon. As students get older, their savings goals will naturally evolve.

Investing
Once they grasp that concept, I move on to investing and the habits that support compound interest in the market, comparing investing at a young age to starting later as an adult. I show them a graph illustrating the “set it and forget it” model, which demonstrates how money can grow over time without active effort. This visual helps them understand how their contributions accumulate and compound, making them feel empowered by the growth of their savings. I encourage them to begin with index funds, and as they gain familiarity with investing, to ask questions and explore other options. For those who are working, I emphasize the importance of contributing to a Roth IRA and consulting with a financial advisor—much like seeking a tutor for help with investing.

The “Game of Life”
Once they understand the importance of saving, I introduce the concept of “the game of life.” This involves considering various life scenarios that may create setbacks in their plans and learning how to handle those situations emotionally in order to keep moving forward.

Spending Habits and Debt
Finally, I talk about spending and how compound interest also applies to debt, such as mortgages and credit cards. I explain the difference between fixed and variable APRs and connect these concepts to current events that can affect interest rates and monthly payments. This often leads to valuable conversations about managing responsibilities and distinguishing between secured and unsecured debt. I remind them that having debt is not inherently bad, but allowing it to spiral out of control can jeopardize everything they’ve worked to build. A good rule of thumb is to keep credit card balances below 30% of the credit limit.

The key takeaway is that financial education is constantly evolving. Staying informed through podcasts, books, or advice from a financial advisor can help create long-term stability.

I’ve been a licensed insurance agent in the State of Washington for nine years, helping people understand the value of universal life insurance as a vehicle for future income. While it’s not right for everyone, those who are in good health, have maxed out other retirement options, and are looking for additional tax-advantaged strategies can benefit from this little-known tax code.

Loans
It’s important to understand that terms like withdrawal or distribution come with taxable implications. However, when you take a loan against the cash value of a policy, you create an agreement that is recognized as tax-free under IRS Section 7702. The loan amount and term are determined based on the current cash value of the policy. The loan will be subject to interest, which is set by the policy provider. Depending on the policy and crediting strategy, you may be able to offset that interest with gains.

Pros and Cons
You can use these loans however you choose! For example, if you want to pay for a child’s college education for four years, you can take loans during that time and then stop. If you want lifetime income, you can request a hypothetical projection on when to withdraw income and tailor that to your retirement plan or a self-driven sabbatical. When structured properly, each of these strategies remains tax-free. Misunderstanding the product or failing to work closely with your agent to align the policy with your financial goals can lead to issues down the road.

Modified Endowment Contract (MEC) Considerations
Everyone should be aware of the risk of unintentionally converting their policy into a Modified Endowment Contract (MEC), which eliminates key tax benefits. When setting up a life insurance policy, the amount of coverage is based on a premium schedule—how much you plan to pay and for how long. If the cash value exceeds the limit applied for insurance coverage, the policy becomes a MEC, causing you to lose those tax advantages.

While avoiding MEC status is crucial, other factors like your crediting method and additional policy riders could also limit your growth potential. Comparing multiple providers allows you to find the best product for your needs.

Working with the Right Agent
When shopping for life insurance, consider working with an independent agent. Unlike agents affiliated with a single company, independent agents can compare multiple providers to find the best quotes that match your needs and health profile. Agents tied to larger companies often experience high turnover, meaning you may not continue working with the person who originally set up your plan.

An agent should always disclose their commission for each product. This transparency helps you determine whether they are recommending a policy based on your best interests or their financial gain. As a fiduciary, I believe this is the best way to build trust and confidence with my clients and prospects.

Disclosure:
KJ Dykema of Family Retirement LLC is licensed to sell insurance only in Washington. For clients in other states, like Texas or California, we refer to licensed professionals. You are not required to follow our recommendations or use our services and may choose any provider.

Little-known fact: There are several months throughout the year when people on a biweekly pay system receive an extra paycheck. This year, it happened in January (a great way to start the new year) and August. It would be easy to splurge on that new (fill in the blank) because, why not treat yourself? But I want to make sure you're actually building wealth. Let’s use that third paycheck to jumpstart your finances—not as a get-rich-quick scheme, but as a strategic step forward. First, make sure you've addressed these key financial hurdles:

Are you caught up on your finances?
Bringing your finances up to date can eliminate mental barriers you may not even realize are holding you back. Emotional hurdles are often the biggest obstacles to financial growth. Think of it like your house—if it’s cluttered and overwhelming, you may hesitate to clean because you don’t know where to start or fear what you’ll uncover. The same goes for your finances. Start by reviewing your accounts, catching up on overdue payments, and reaching out to creditors. When you do, you gain the power to negotiate your debt—whether by lowering interest rates, setting up payment plans, or consolidating loans. Imagine how empowered you’ll feel after that first step!

Have you maxed out contributions to your retirement?
It’s all about compounding interest. You don’t need a side hustle—you need to invest what you already have so your money works for you while you’re working. Even better, if your company contributes to your retirement account, those contributions compound as well, accelerating your long-term wealth.

Get a life coach, mentor, or financial advisor
Investing in yourself is one of the best ways to ensure accountability, discover new ideas, and stay on track toward financial success. If you lack the structure or knowledge to create a clear financial path, there are professionals who can guide you toward your goals.

If you've checked those boxes, it’s time to start looking at outside investments. The most common options are real estate and brokerage investing. If you're considering real estate, you could use this extra income toward a rental property down payment or start saving for one. Before diving in, it's a good idea to assess your financial standing—understand how much you need to save and what you prequalify for. This will help smooth the lending process and get you into a property sooner.

If you're looking to invest in the stock market, the process is simple: open an account, fund it, and start investing. As a general guideline, your initial investments should focus on funds that align with your growth goals and timeline for withdrawal.

Both of these investment strategies require having a professional in your corner. As a Master Registered Financial Consultant, it’s my job to ensure that the goals you have for your future come with a flexible plan and measurable progress along the way.

​Generational wealth is often built through real estate, as it provides a relatively accessible path for adult children who struggle to save money. Many view real estate as a valuable asset rather than an expense. However, qualifying for a mortgage or saving for a down payment can be nearly impossible without financial assistance. When parents help with this process early on, they set their children up for long-term success. The challenge, however, is that not everyone is in a position to do so, and it’s important to assess how this could impact your income—especially if you are nearing retirement.

For parents in a strong financial position, it’s best to avoid tapping into their IRA accounts. Withdrawing from an IRA could create a significant tax burden for both parties. IRA withdrawals are taxed as ordinary income, so if parents rely on their IRA for retirement, taking out more than needed could push them into a higher tax bracket. Additionally, Medicare premiums are based on income from the previous two years, meaning a large withdrawal could increase insurance costs during that time.

A more tax-efficient strategy may involve using after-tax accounts. These accounts can be ideal for funding a home purchase, and if managed correctly, they may have minimal tax implications for the parents. It’s also important to consider the Tax Cuts and Jobs Act (TCJA) of 2017, which doubled the lifetime gift exemption for beneficiaries to $13.99 million starting in 2025. If a child receives more than the gift limit, they could face tax consequences. Consulting with a tax professional is essential to ensure proper planning for your child’s future.

If you plan to buy the house yourself and have your adult child make payments, it’s crucial to ensure the home is titled in a way that benefits them. In cases where there are multiple children and the parents have passed away, an improperly titled estate—without a transfer-on-death designation—could leave the asset’s distribution to the discretion of the estate's guardian, potentially leading to complications.

When making major financial decisions, it’s essential to assemble a team of financial advisors, tax preparers, and estate attorneys to ensure the best outcomes for both the present and the future.

I've seen many people get into trouble with their spending habits, especially when they have extra money and don't save it. Over the years, I've observed some of the worst ways tax refund checks have been spent.

A Down Payment on a New Car or Boat (Lease or Purchase)
Depreciating assets is one of the worst ways to spend your money. Generally, when someone puts a large sum down on a car or boat, they believe it will help reduce their monthly payments. However, they are often still paying high interest rates. Many times, they won’t be able to pay off the loan before the vehicle or boat breaks down. While salespeople may counter concerns about high interest by offering refinancing options, interest rates haven’t improved much in recent years. If the loan balance exceeds the asset’s value, refinancing may not even be an option. Ideally, you should be able to make these payments in line with your income and expenses without needing extra funds to cover them.

Paying Off Small Debts with the Lowest Interest Rates
It may feel great to pay off a small loan, but if that loan has a lower interest rate than others, you're potentially prolonging your financial struggle. Instead, prioritize paying off higher-interest debt to reduce the total interest you pay over time. These loans might have larger balances, but by tackling them first, more of your payment will go toward reducing the principal, helping you pay off the debt more quickly.

Putting it in a standard savings account for a large purchase
At first glance, it may seem like you’re making a smart decision by saving your money. However, with current inflation, you could actually be reducing the value of your savings. Considering a high-yield savings account or a fixed CD for a set period is a better way to maximize your returns. When evaluating a CD or high-yield savings account, be sure to consider the duration and your liquidity needs.

Ultimately, the key question to ask is: Will this purchase contribute to future debt, or will it help grow the assets in my portfolio? If you're someone who struggles to see the long-term impact of your spending beyond immediate gratification, it's wise to consult a financial advisor for guidance.

​Emotional investing is nothing new to the markets. In recent history, we have seen it work in our favor as promises of growth propelled our future. However, when investors are warned that momentary pain is on the horizon or are already experiencing it—a primal sense of survival takes over. How do we evaluate this and recognize when to preserve and when to pivot?

Evaluating where you are in your plan is the first step in assessing your next move. Just as you would not continue your strategy in chess after a counter-move without reading the board, it’s important to reassess your position. In some cases, that might mean stepping back to position yourself for a stronger defense. This pivot can involve sectors, bonds, or equities that you may not have previously considered. As you evaluate, you will need to establish a time horizon for performance and set expectations for pivoting again. This method will keep you vigilant and foster a sense of control.

Preserving your future contributions to avoid undue market volatility is not always the favored approach, but when all asset classes decline, cash can be the best place to hold until markets reach all-time lows. When evaluating an entry strategy from a preservation or cash position, the metrics differ from those used when dollar-cost averaging into the market. You will need to determine which positions have the most upward trajectory or resilience in similar conditions. This approach allows for faster growth, as accumulation occurs without needing to recover from market turmoil. However, it is important to note that past performance is not an indicator of future growth.

Those nearing retirement have likely already discussed with me how to structure a plan that allows for market corrections without affecting their income. For those with a longer time horizon, stockpiling and investing now may present an opportunity, as this could be the lowest market level seen for some time. If you know someone who is struggling to feel confident in their plan, refer them to me so they can experience the same peace of mind that comes from the strategies we set up earlier in the year.

Are you preparing your taxes and preliminarily seeing that you owe this year? While that can be frustrating, there is still time to reduce your taxes if you qualify. The main ways are through contributions and losses—contributions to a traditional IRA or HSA and realizing losses from a brokerage account. Contributions need to be made by April 15th, and losses have closed out in past years but can roll over.

Traditional IRA
For 2024, the maximum IRA contribution is:

• $7,000 for those under 50
• $8,000 for those 50 or older

This can be directly deducted from your income. However, certain exceptions may limit the full deduction, such as if you or your spouse have a 401(k) through work or if your income exceeds certain thresholds. At a glance, here is whether it’s possible to contribute to get that deduction.

HSA Contribution
Contributing to a "prior year" HSA is another option for people who have a high-deductible healthcare plan (HDHP). Those plans have access to an HSA, and contributions can be tax-deductible. If you are unsure whether you have the right type of plan, ask your benefits specialist.

• $4,150 for an individual plan
• $8,300 for a family plan
• Additional $1,000 for those over age 55

If both spouses have a family HSA, their max contribution can be $8,300 combined. Lastly, if your employer contributes to these plans, their contributions will count toward your total contribution.
​
Capital Losses
You can deduct up to $3,000 from your ordinary income if you sold positions in your brokerage accounts in the previous year. These losses can roll over from year to year. Be sure to keep records of these transactions and consult a tax professional for personalized guidance.

​If you have talked to your tax preparer and are ready to fund an account, we are here to help. With an array of investment options and guidance tailored to your financial goals and risk tolerance, we will ensure your account fits into your broader financial plan.

Reference
1. Publication 590-A (2024), Contributions to Individual Retirement Arrangements (IRAs)