I always find when I cast on using the thumb method and then knit the first row, I have a lot of left over yarn that ends up mid-stitch (as in the picture attached). I’m just wondering if I’m casting on in the right/wrong way, maybe I’m just casting on too loosely which is causing this, or something else?
That’s perfectly normal for that cast on unfortunately. It’s really only good for casting on just a few stitches.
I suggest learning long tail or the knitted cast on. Both videos are in the free video section here in KH. Or you can see them here-
It was the first cast-on I learned, and I had that same difficulty with it at the beginning. Years of knitting until I tried it again, since it’s good to pick up stitches and knit in the other direction. The key to using it for more than a few stitches is to relax and NOT pull between stitches as you work the first row/round. I have since used it successfully for socks, gloves, mittens, scarves (where the cast on ends up in the middle of the neck), etc. In my opinion, it shouldn’t be taught as the first cast on. Cable or knitted cast on would be easier for a new knitter and pose no problems for those who work tightly to begin with.