Well you need to balance it out.
Getting 12 guys is very important. 15 are probably better so you can change out some guys that get wounded.
As for how to invest: I am playing on expert so my funds are always lacking. I buy maybe 2-3 Leather armors (red ones). They sometimes come somewhat damaged so they are cheaper and help with the early game. I also try to get hoggarts armor at the start with dagger or reinforced wooden flail.
Then try to get to 8-10 guys and buy some pitchforks, knives. The reason for this is so you can surround raiders that are fleeing and dagger their armor.
Basically I engage a single raider with a guy with shield and tank him until I killed the rest, then surround him which in almost all cases sends him fleeing as long as they don’t have a leader. Edit: Pitchforks help with the rest of the enemies here. You can also use your archers to block his movement if you don’t have enough guys.
Flails also are amazing to get fully repaired raider armors.
This is how I get worn mail shirts for all my guys.
If I get to ~2k crowns I usually rush the ambition for battle standard since it’s very strong early and morale boost is still great.
After that I either buy 1-2 Hunters to make more passable archers and then invest almost exclusively into armor. I try to get at most 2-3 normal mail hauberks, then start buying reinforced ones (210dur) until I have 2-4 and then invest into some (cheap) scale armor. Take caravan escorts to settlements with armorer to get better prices on armor. “Well Supplied” status also increases chance for named gear I believe. Almost always have one of those when I do escort quest – but that is for later game when all my guys have decent-ish armor.
Once my frontline wears at least Hauberks I start buying Warbows for my archers. They are 100% worth the investment. If you ever see a good named bow at a bowyer’s shop you should buy it if you have enough funds.
After that I start to increase my safety buffer 5k crowns to at least 20k crowns, the more the better. Some named armors cost 40-50k crowns so you need a lot in reserve. Also since you now don’t suffer deaths from retreat anymore having that amount of cash will ensure you can treat your wounds in ~2 days if you visit a temple. During this time I buy cheap recruits with military background like raiders, adventurous nobles and sellswords. I don’t ever buy bastards, disowned nobles, retired soldiers or swordmasters because of their trash fatigue or resolve.
Once I get a literal ton of crowns to spare I start buying hedge knights because of their enormous potential if they get some talents.
This works for me quite well. I have to say I pretty much only take brawlers and farmhands at the start because of their high base HP and fatigue so they can wear the bought armor and hardly ever die.
You didn’t ask for this but I want to show off my new baby :) It wrecks everything