Ah, your first job. There is nothing like signing a new contract and beginning to imagine the wonderful playboy lifestyle you will live outside the cubicle. Fast-forward two months, and you find your bank account shrinking faster than it did before you started. What happened?

When you enter the world, more and more things and people will be competing for your money, and that feeling-rich euphoria can actually lead you to overspend for years without knowing it. Here are five money lessons to learn early, so that new paycheck can actually make you richer.

1. Money is like duct-tape.  It can do nearly anything, but it is only a tool. It is something you trade your time for, and then use for the things that are important to you. Decide where you want your money to take you – Understand your life plans and goals. You’ll likely find that worrying about money is not one of them (probably the opposite), and most of your real dreams will be enabled by even a little bit of planning ahead (or a budget if you want to get into the details). The point is, deciding early what is worth your hard-earned money and what isn’t will allow you to make decisions from a position of power. 

Duct Tape

A person who is driven by corporate career aspirations can afford to spend more money on clothes for work – the one who is saving for a gap year backpacking around Europe should probably wait for blazers and slacks to go on sale. Neither of these is wrong, they just reflect different priorities.  Ramit Sethy, a personal finance guru, advises people to “Spend lavishly on things that matter, cut costs ruthlessly on things that don’t”.  Your money can be a tool to accomplish your goals, or something that slips through your fingers. Don’t let it slip. 

2. Know the true cost of your choices.  What if one small choice could make the difference between rags and riches? Financial stress and wiggle room? Entering the workforce, you will begin to have many options to sign up for services (and monthly bills). Deciding between a $750/month single apartment and a $500/month per person 2-bedroom? The difference between those two apartments is not $250, but $3,000 per year!  This is where your values can drive your decisions. If you love living alone, then by all means, go for it! Just understand that you are giving up the opportunity to spend $3,000 on an extravagant vacation to the Caribbean.

Cable, gym, car payment, maid service, magazines, music services, video services … the list goes on, and the bills ADD UP. Make a list of all your monthly bills, and multiply by 12. Don’t let the number surprise you.

3. Pay yourself first. Probably the most common financial advice out there is to ‘pay yourself first’. It is truly remarkable how, no matter what the number on a person’s paycheck is, most will still find themselves with a bank account that does not grow. After all, all those fun tickets are just sitting there, why not go bungee jumping? The principle of paying yourself first means taking an appropriate amount (your savings) automatically out of your paycheck before it even deposits into your account.

Often, your employer can deposit directly into a savings or investment account, or you can schedule the deposit to happen automatically on payday. This way, you avoid the temptation of those extra bucks begging to be traded for new speakers and a replacement yoga wardrobe. 

4. Don’t turn down ‘free’ money. This one should be very obvious. If somebody offered you $10, as long as you didn’t spend it for 30 years, what would you say?  This is, in essence, what many employers offer through a 401k match (note: this particular instance will not apply to everyone). Imagine your employer offers you a raise, as long as you save part of your paycheck. They will hold onto all the money and pay you (plus interest) when you’re older or when you need it. This is a great idea for two reasons. First, it forces you to save. Second, it’s extra money! If you follow lesson 3 and this one, you will find yourself with a pile of cash right about the time you decide you’d like to exit the rat race.

401k matches, interest rates, and even mail-in rebates all make a difference in your finances. Don’t leave money on the table!

5. Money can work harder than you can. Every person on this planet has 168 hours per week. It is probably impossible and extremely inadvisable to try to spend this whole time working. But money doesn’t need to sleep. It can be put to use and grow every day, rain or shine, no matter how it feels. This can either work for you (investing) or against you (debt). You want it working for you. Imagine you owned a large company and had hundreds of employees working to make you money. This is exactly what investing is! You OWN a piece of a company (stock) and get to share in the profits generated by the work of all those employees!


If you take all of the above lessons to heart, you should find yourself making smart decisions and accumulating wealth. The most difficult part is just to start, but starting early lets you take advantage of a longer working career and the ability to recover better from mistakes. There are many more lessons to learn, and much more to say, but learning these five early will put you ahead of your peers and well on the way to living a life free to do what is important to you.