How to Invest Your First Paycheck

But once that first bit of money lands in your account, it’s easy to want to spend it right away. Still, this is exactly when you should take a moment to think strategically. Starting to earn income is the perfect time to plan not only how to spend your money, but also how to manage it wisely.

Investing early allows your earnings to generate more income over time. The sooner you start, the more time your money has to grow and compound. Starting young also gives you room to take on a bit more risk and learn without too much pressure. This helps you build financial literacy and make smarter decisions later on.

That said, before jumping straight into investing, it’s worth covering a few key financial basics:

• Establish an emergency fund: it’s a good idea to set aside at least a few months’ worth of essential expenses before investing actively.
• Track your spending and make a budget: knowing how much comes in (income) and how much goes out (rent, transportation, food, entertainment) will make it clear how much you can realistically invest. Having a solid budget helps you determine how much you can put toward investments without compromising your basic needs.
• Pay off high-interest debt: investing while carrying heavy financial burdens might not be the most efficient choice.

Once you’ve covered those essentials, you can start thinking about how to invest your very first salary wisely:

1. Build financial literacy: when you’re just starting out, learning the basics is essential. Consume educational content on personal finance and familiarize yourself with the key terms and types of investments available.

2. Set clear goals: it’s important to know why you’re investing. Is it for a long-term goal (like retirement or buying a home) or a mid-term goal (like travel or education)? Knowing your “why” will help you decide on the “how”. One thing is certain: the longer your money stays invested, the stronger the compounding effect can be.

3. Start small: you don’t need a large amount to begin. Even small, regular contributions can create significant results over time.

4. Understand your risk profile: it’s essential to know what kind of investor you are. Are you more conservative or more moderate? Based on that, it’s wise to mix safer assets with riskier ones in a way that fits your profile.

There’s no one-size-fits-all answer, but as a general rule, if your income is close to the minimum wage (in Spain, for example, the 2025 minimum wage is €1,184 gross per month in 14 payments [about €16,576 gross per year for full-time work]) you might consider saving or investing between 5% and 10% of what’s left after covering basic expenses.

As your salary increases or your fixed costs go down, you can raise that percentage.

There are plenty of investment vehicles to choose from depending on your goals and risk tolerance. For beginners, mutual funds and index funds can be a great choice since they allow you to diversify your money across many companies without having to pick individual stocks. If you prefer something more conservative, certificates of deposit (CDs) or high-yield savings accounts offer security, though typically with lower returns. On the other hand, if you’re willing to take on more risk for potentially higher rewards, you might look into stocks or even long-term retirement plans. The key is to tailor your choices to your profile, goals, and time horizon.

• Don’t wait until you “have enough money” to start. Getting started early, even with small amounts, can make all the difference.
• Don’t fall for “get-rich-quick tips.” Smart investing requires knowledge and consistency.
• Don’t let your savings just sit idle: inflation can eat away at their value.
• Review your plan regularly. Your circumstances will change, and your investment plan should adapt accordingly.

At MAPFRE, we have a dedicated financial advisory unit, MAPFRE Gestión Patrimonial, ready to help you make your first investment and achieve your financial goals. And if you want to learn more, visit our website. You’ll find a full section on financial education and insurance culture, where we share practical advice to help you save and invest safely and confidently.

RELATED ARTICLES: