I still remember that exciting feeling I had when I got my first paycheck. I had this unstoppable feeling as I walked into the bank, seeing that balance for the first time, thinking, finally, I made it. But guess what, within two weeks, I was back to zero, and to date, I still wonder where it all went.
According to a 2024 CNBC survey, nearly 65% of young adults spend their first paycheck entirely within a month. This should even tell you, you are not alone in this if you've ever been there. The truth, to be honest with you, is, earning money feels so amazing, but knowing how to manage it is where the real financial freedom begins.
The reason for this post is to share with you the money lessons I wish I had learned before my first paycheck. These insights could have saved me years of financial stress and helped me grow wealth faster. Let us get in as I share these insights with you.
Money Lessons I Wish I Learned Before My First Paycheck
1. Budgeting should not be an option, but compulsory
Let me share my story with you. When I started earning, I thought budgeting was for people who were struggling financially. I couldn't be more wrong. Budgeting shouldn't feel like punishment but a plan for your financial freedom.
- How does budgeting help you? Budgeting helps you:
- Track where all your money actually goes
- Plan for your future, as you will be able to save and plan well for your bills.
Avoid living lavish lifestyles
What I use now is the 50/30/20 rule where 50% goes for needs, 30% for wants, and 20% for savings and debts if I have any to pay. Advice is that you should not let your money control you, but rather give every dollar you earn a job before it disappears.
2. Saving Earlier
If I had known saving earlier was so good, I would have saved at least ₵100 per month but I thought this was pointless. Later, during a real estate class with one of my lecturers, I learned how compound interest turns small savings into big wealth.
Let us consider this example:
If you save just ₵200 per month at a 6% annual interest starting at age 22, by 40 you'll have about ₵85,000. Wait for your turn, yours to start and you will have just a meagre, something you can't write home about. This is not some magic, no, it is math. The earlier you start, the more time your money has to grow.
Do not wait for higher salaries before you start saving; start with what you have and allow time to start the rest.
3. Not Buying with a Credit Card or On Credit
Getting my first credit card was like a bonus paycheck to me. The big mistake I made was use it unreasonably. Not a mistake you should even welcome, because within months, I was paying more interest than I ever thought of.
What I wish I knew
- I wish I knew that credit scores affect one's ability to rent, get loans, or even land some jobs.
- I wish I knew it was important to keep credit utilization under 30%
- A lesson for you: Use your credit to build credibility and not debt.
4. Investing Earlier Without the Idea that it is Just for the Rich
I personally used to believe investing was something only finance people did. The truth? It is for anyone who wants to stop trading time for money. Just start small with even ₵1000. Some basic principles.
- Invest what you understand, not something you do not.
- Think long-term and not short-term. 5 years and more is okay.
- Don't put all your eggs in one basket, but rather diversify.
- Your money should be working as hard as you do.
5. Setting Aside Emergency Funds That Save From Panic
Emergency funds are funds you should set aside for emergencies. For instance, when my laptop broke down in my second year of work, I had no emergency savings but only my salary advance. It actually took me three months to recover from the loss.
- What does emergency funds protect you from?
- Emergency funds protect you from sudden job loss
- Emergency funds protect you from medical emergencies
- Emergency funds protect you from car or home repairs
6. Learn How to Master Money
I wish I had learned about money mastery before my first paycheck. One side of money that people do not talk about is its emotional side. I used to buy things to feel successful, "to reward myself" for hard work, but those purchases rarely brought me any lasting happiness.
Understanding money helps you make good and informed decisions. Ask yourself
- Why do I spend the way I do?
- What does "enough" really mean to me?
7. Financial Education Is the Real Flex
The richest people I have met are not the ones with the biggest paychecks. No, they are the ones who keep learning about money. Follow credible financial blogs on podcasts and YouTube Channels. Learn about taxes, insurance and retirement planning.
You can equally read books that educate you on finance. Some popular ones are:
- Rich Dad Poor Dad by Robert Kiyosaki
- I Will Teach You to Be Rich by Ramit Sethi
- Your Money or Your Life by Vicki Robin
Start Now, Don't Wait For Next Time - My Final Thoughts
If I could talk to my younger self before that first paycheck, I'd say:
"You don't have to be rich to start managing your money wisely. You just have to start
Whether you are a student or a freelancer or a fresh graduate, how you manage your income is what gets you going in the right direction to financial freedom. Start now and continuously learn.
Read Also:
How to Retire Comfortably Without Earning a Six-Figure Salary
The Real Cost of Instant Gratification: Why Impulse Buying Keeps You Poor
Small Business, Big Profits: Smart Financial Tips for New Entrepreneurs
