My first paycheck and how I lost $1000 in the process.
I was 17 years old I got my first legal paycheck. I don’t even remember the entire amount I just remember being proud.
I was poor growing up. Matter of fact poor is an understatement of what I was. I was broke as f**k and I never received a legitimate paycheck before. So when I got paid, I didn’t know what to do with myself. That was August 2002, I was out of the house and finally I had my own money...
Boy was I an idiot.
July through August 2002, I was training as part of the indoctrination program for the United States Naval Academy Preparatory school in Newport, Rhode Island. As a part of the process I served as an enlisted member in the military. During that time, I was paid a salary based upon the lowest rank in the Navy. It wasn't much, but it was more money that my Mom ever made while working. So at 17 years of age, I actually had some money with no actual bills outside of the "Black Tax."
I spent approximately eight weeks in training so that meant I had two months of paychecks that had accumulated in a bank account. I thought I was rich when I heard the amount I was paid.
On the first day of my freedom from training, I went to the ATM for the first time. All I can remember is saying, "oh my God look how much money I have." A couple hours later all I could say is, "oh my God, look how much money I spent." That day served as a great lesson in financial literacy and taught me that I had no concept of managing money.
At 17 years old, I had no concept of a budget or saving my money. A lifetime of paucity led to a reality of wanting everything in sight. I remember dreaming at night about everything I didn't have. When I could finally afford them, I couldn't control myself and didn't realize what I was doing.
That day in the Navy Exchange, I bought DVDs, CDs, fast food, paid for a haircut for the low amount of $1000. You read that correct, I spent $1000 on stuff I truly didn't need.
At that point in my life, I was in the best financial position you could be in. I had a good income with no true liabilities. However my life had afforded me with zero financial literacy.
Hindsight is 20/20. I understand today, that financial independence has a simple formula. The first step is pay yourself.
I had zero bills, my living expenses were paid for, guaranteed meals, and all I had to do was send my Mom some money each month ("Black tax"). Yet I used that time to spend 100% and sometimes 150%, of what I made each month. I finished that first year in debt.
Again I was an idiot.
Now, why am I sharing this? Well, I share the story with you to make sure that you don’t repeat the same mistakes that I did. When you get your first paycheck have a plan. Pay yourself first and live within your means. My financial literacy today is a result of both good and bad decisions that I made in my life. And believe me I made a lot of bad decisions, however those experiences taught me the most.
I still have the CDs that I bought that day. Problem is no one uses CDs to listen to music, so they are collectors items and by collector I mean they collect dust.
Your first paycheck is going to be an amazing feeling, but have a plan. Execute that plan. And keep the long goal in mind. My goal is financial security and independence for my family. What's yours?