Like many has suggested I started to use manor system. But alost got told I should hold on to all materials that I get.
My problem is that those 2 suggestions get me to having no money for upgrades and some materials I have no idea what to do with..
What was the point on holding on the the materials?
Well, it's not necessary to hold on to them unless you know you'll want to be crafting something containing those materials in the near future.
Even if you do need them again in the future, maybe you needed the money they were worth now more than then and you can simply buy them back through buyshops or w/e. Let's hope for you the mat's worth didn't increase over that time :p
Being lvl 17 I have no idea how to craft.. And only recipes I have found is for dwarfs only..
Should I just sell the materials to a npc shop?
You will only find recipes for dwarves as they are the only race that can craft. The exception is something called "common craft". These are recipes you can get from fishing for things such as hairpins, eye patches, potions dyes, etc.
Any of these low lvl recipes you can sell to the npc's. If you get a recipes for shots then you can try to sell them to players.
With your mats, go to giran (if you don't have the money you can run) and see what your mats are going for. You can even find some player buy shops that will give you a good price. Then you can use the shop in giran (or go back to dion or gludio) for a new weapon, armor, etc.
At some point you will want to craft your weapon (using a dwarf you trust or a player craft store) and you will want to save any mats that are required for that craft.
Never sell mats to NPCs, players buy them for up to ten times npc worth sometimes. Just hold on to all of them and make a trip to Giran on a fine summer day. Look for the highest offering buyshop (or create your own sell shop if you're looking for a specific price and have a high amount) and sell them. You need cash more at the point where you're at then the thought you might have one tenth of a 40+ craft :)
No need to sell to buy shop (they buy very low usually). There is always a demand for materials. Just look around Giran as was suggested, find highest price the materials are being sold for and then decide whether you want to sell for the same, more, or less.
When you get done XPing at night is the best time to set up a sell store.