How to Make the Most of Your Paycheck Share PINTEREST Email Print Matthew Hollinshead/E+/Getty Images Table of Contents Expand Reduce Your Taxable Income Estimate Your Withholdings Take Advantage of Benefits Use Your Employe Match By Miriam Caldwell Miriam Caldwell Miriam Caldwell has been writing about budgeting and personal finance basics since 2005. She teaches writing as an online instructor with Brigham Young University-Idaho, and is also a teacher for public school students in Cary, North Carolina. Learn about our Editorial Process Updated on 01/30/20 When you receive your first paycheck you may be surprised at how much is being taken out in taxes. If you are young and single, you are at a disadvantage when it comes to taxes. That's because you have fewer deductions than people with children and those who are married. And if you don't own a home, you will not have those deductions, either. Here's how to make the most of your paycheck by taking advantage of the benefits offered by your employer. Reduce Your Taxable Income If you sign up for benefits offered by your employer, you can reduce your taxable income. That's because medical benefits are taken out pre-tax. This will make your dollars stretch further. And we're not just talking about health insurance. Things like your retirement contributions and flexible spending accounts can help reduce your taxable income. Your health insurance, retirement contributions, and flexible spending accounts can help reduce your taxable income if they are offered through your workplace and are taken out pre-tax. For example, if you take advantage of your employer's match to your 401(k), you can increase your retirement contributions without being taxed on them. However, some benefits such as purchasing a reduced-cost bus pass are probably not tax-deductible, though you should check with your company's human resource representative. It's also important to review your benefits each year during open enrollment as your situation changes. Estimate Your Withholdings As you consider what benefits to sign up for, you may feel like you can't afford to sign up for them all. However, if you check with a payroll calculator, you may be surprised to see that your insurance premiums and 401(k) contributions really do not affect your paycheck that much. This is because they are deducted pre-tax, which in turn lowers your taxable income. Take Advantage of Benefits If you sign up for the benefits, be sure to take advantage of them. The eye insurance may be great, but if you never use it, you are just throwing money away. Similarly, you need to make sure that you use all of the money in your flexible spending account (FSA). This can be tricky because you have to estimate the amount of money that you'll need each year to cover healthcare costs since the money does not roll over year-to-year. However, if you utilize your FSA correctly, it can save you big on health insurance costs. Use Your Employer Match And don't forget about your employer match when it comes to your retirement. Since these are matching funds, so you must be contributing to your 401(k) in order to receive them. For example, if you have an employer match of up to 3% of your salary, your employer will contribute an additional 3% when you do. This will bring your total contributions up to 6% of your pre-tax earnings, which can add up quickly. Plus, it's basically free money. One of the best ways to stretch your paycheck is to take advantage of the employer match on your retirement funds. Other Tips: You can stop living from paycheck to paycheck by setting up a budget and saving money each month. Set up an emergency fund, and then work on getting out of debt as quickly as you can.Sign up for your retirement account as soon as you can. This is one habit that will help you in the future. You can also begin contributing to an IRA if you do not qualify for a retirement savings account through your employer. The sooner you begin saving for retirement, the less you'll need to put away, due to compounding interest.If your new job offers bonuses, you should not include them in your budget. Bonuses vary from quarter to quarter or year to year, and you may not receive a bonus every year. Instead, you should create a spending plan for your budget for your bonus and use it to help you reach your financial goals more quickly.Getting out of debt will increase how much you can do with your take-home pay. If you are constantly struggling to make ends meet or you want more spending power, reducing your monthly obligations, like debt payments, will do that. Take the time now to set up a budget that gives you extra money to put toward your debt payment plan. The sooner you are debt-free, the sooner you will be able to reach your other financial goals.