First Paycheck? Great, Now Let's Put That Money to Work

To those who've recently entered the workforce and received their first paycheck, congratulations! You've taken an important step toward financial security, and you'll get there faster if you make a few key moves while avoiding some common errors.

You don't want to end up living paycheck to paycheck, as some 60% of Americans were recently doing, per the LendingClub's "New Reality Check: The Paycheck-to-Paycheck Report." Note that fully 45% of high-income folks were recently living paycheck to paycheck, too! And women can be extra susceptible to living paycheck to paycheck, as they tend to earn less than men. (Still, women have a lot going for them financially, as well.)

Image source: Getty Images.

Here are five powerful tips that can get you in good financial shape. They apply to those who have recently received their 408th paycheck, too -- they're not just for new workers.

1. Know how to get rich

This is not necessarily the first savvy move to make, but it can be the most motivating one, so let's start here. Check out the table below, which shows the surprising wealth you can amass for yourself if you save and invest regularly. It will take a long time, so you'll need to persevere and believe in the math.

Data source: Calculations by author. 

It's a powerful eye-opener, right? Investing $6,000 annually amounts to just $500 per month, if you can swing that. If you do that starting now and you're 22 years old, you can end up with more than $1.6 million by the time you're 62. That might help you retire early!

Better still, you may be able to sock away much more now, and most likely much more in future years, so you might well end up a multimillionaire, possibly retiring in your 50s! Plan to start learning more about how to invest in stocks -- and consider just sticking with simple, low-fee index funds, too.

2. Build a budget

A critical thing to do throughout your life is to live below your means. So whatever you're earning, aim to spend less than that. A good budget can be a great help with that.

Building a budget involves taking stock of exactly how much money you have coming in, and then planning how it will all be spent -- on savings and investments, keeping a roof over your head, and other necessities, and on some discretionary expenses, too.

Having and sticking with a budget can lead to a less stressed-out life and can help you meet your financial goals, too.

3. Establish an emergency fund

It's also important to have an emergency fund (or access to sufficient funds) that can support you for at least three months, if not more. It may be hard to imagine it happening to you, but every year millions of Americans face nasty financial shocks, such as a job loss, a costly health setback, or just an unexpected, expensive, necessary car repair.

So sock away enough money to be able to keep paying your rent, buying food, paying for utilities, buying gas, and so on -- for at least three months, so that you don't end up in serious trouble.

4. Stay out of high-interest-rate debt

Here's a very common financial blunder: Getting into high-interest debt, such as debt from credit cards. Plenty of borrowers are being charged 20% or 25% or more annually. That means that those carrying, say, $30,000 in debt are on the hook for $6,000 to $7,500 each year just for interest alone!

Debt can be necessary, such as when you want to buy a home or if you can't afford college without it, but such debt tends to carry lower interest rates. High-interest-rate debt can snowball and can keep you from achieving your financial goals, such as traveling, buying a home, putting your kids through school, and securing a comfy retirement. So don't be tempted to just charge some unnecessary expense if your paychecks can't cover the cost. 

5. Keep learning

Finally, for best results building a financially formidable life now that you've started collecting paychecks, keep learning. Read up on all kinds of financial topics regularly, so that you can make savvy moves regarding saving, investing, car insurance, home insurance (or renters insurance), health insurance, homebuying, taxes, shopping, and so on.

The more you know, the better you'll likely do.