When I got paid for the first time, it was such a big moment for me. I felt that I finally earned the fruits of my labor. It was my first on-campus job.

I was working for long hours, hoping to make some extra bucks. Luckily, I was getting paid a nice rate for all the hours that I was putting in, so I was expecting a big payoff at the end.

I already planned out how I was going to spend the money. At the time, I was really into sports gaming. I wanted to purchase the new 2K that had come out recently as well as a PS4 to play with.

I patiently waited all year long to buy these two items and I was essentially saving up all of my money for that single purpose.

In fact, it was my biggest motivation to work a really tiring job, which required looking at a screen for long hours.

However, I didn’t prepare myself for the big surprise that came at the end. Since I was so focused on getting paid, I totally forgot that some of my salary would be deducted and paid to the federal government in payroll taxes. It turned out that there was an additional cut for the state government as well.

Although I knew that I would eventually get this money back as a tax refund, it wasn’t going to happen until months later. I felt simply frustrated that the cash that I would rather want to have now was gone for at least a couple of months.

While this didn’t necessarily prevent me from eventually achieving my goal of buying a new game console, it made me start thinking about how to take advantage of existing tax rules to pay less taxes and increase my savings.

I found that the most common way of reducing my taxable income would be to open an IRA, which is short for an individual retirement account.

If you open an individual retirement account, you can reap a tax benefit by contributing to that account.

Since the government doesn’t tax your retirement savings, you can reduce your taxable income by simply saving more money in an individual IRA.

I tried to find the right information about how to set up such an account and it turns out that it’s super easy to do. You just need to find the right provider for your needs, which depends on a number of things.

First, you need to decide how much guidance you ideally want when you are investing. You might need to ask yourself these questions:

Do I you want to make every decision myself on a daily basis? Or do I want someone who I can trust to take care of my investment on my behalf?

These are no trick questions and there’s no wrong answer here. This is just for you to decide your own investment approach and make the right decision based on that.

It turns out that it makes sense for most people to work with a low-cost broker who can help you invest in stocks and bonds. Historically, the stock market has an annual return of 7% on investments.

If you contribute $1,500 to your IRA this year and keep it for 40 years in that account, you can get $24,451.

Of course, there is no guarantee, as you can also lose money in the stock market. However, the stock market has historically performed far superior to other investment vehicles, so it might be make sense to work with a broker or a robo-advisor.

The alternative is to make investments by yourself and track them every day, which can be exhausting and not very cost-efficient. There is an opportunity of cost of the time that you spent tracking your investments and making new ones.

Unless you make enough money through the trades you make in the stock market to balance your commission fees and the amount of wages that you could’ve earned had you worked the same amount of time, then investing by yourself may not be the best option.

You can also find a robo-advisor and let it automatically pick stocks for you. In this case, you entirely let a machine take care of your investments rather than talk to an actual person.

In case you don’t want to spend significant time and energy while trying to find the best investment opportunities, which is a difficult thing to do for most people, you can also set up an account with a broker and discuss your options with a trained professional.

Remember, saving is good for your future. It ensures that you lead a healthy and happy life after retirement if you start saving from today. While it may be more tempting to spend most of your money today, everyone should at some point start preparing for the future. The earlier you start, the better it always is.

Author's Bio: 

Cem Vardar has recently started wading the waters of personal finance and the fin-tech industry. Cem Vardar is an editor at Ubund.co a fin-tech platform that aggregates customers and provides 1—2 years pre-payment on their subscription services.