I remember listening to an interview with Mark Cuban, in which he talked about how in his 20s his goal was to be a millionaire by age 35.
Being in my early 20s at the time, that idea resonated with me. I was getting into personal development, and I have memories of writing down the affirmation, “I’m financially independent by age 35.”
How would I get there? I didn’t know.
But looking back, I realize that it would have helped to have a clear vision of the milestones necessary to achieve that goal.
Financial Milestones To Reach By 35
The milestones outlined in this article represent one path you can take to becoming financially independent.
I’m 35 as I write this list, which is loosely based on my own experiences. And while I’m not yet 100% financially independent — i.e., I don’t have enough money to sustain me for the rest of my life — I’m on track to reach that milestone before age 50.
Most importantly, I have what I consider to be a healthy relationship with money.
If you’re not where I’m at today, don’t worry. There’s no point in beating yourself up over past behavior, and it doesn’t help to compare yourself to my situation (or to anyone else’s). The key is to focus on the correct next steps and gain some clarity about what’s ahead.
While the title of this post is “Financial Milestones To Reach By 35,” the truth is that your age doesn’t really matter. What’s important is accepting where you are today and choosing to make your future better than your past.
With that in mind, let’s dive in…
Milestone #1: The Day You Said “No”
Your budget is pretty stretched.
You get invited to go on a trip. It’s a destination bachelor party for someone who you consider an acquaintance — i.e., not a close friend.
You can go. You can get the time off from work.
But looking at your budget, you realize that the only way you can afford the trip is by putting it on your credit card.
You think hard about it.
And in the end, you say “no.”
Living a debt-free life and placing your financial freedom first won the day.
Milestone #2: The Day You Learn How Interest Works
“Oh crap. Why would anyone want to go into high-interest debt?”
That’s your thought after noticing that your debt balances are not going down. Yes, you’re making the payments. But the debt is still there.
So, you Google the phrase “debt repayment calculator.”
To your amazement, you learn exactly how much your debt is costing you. Making the minimum payment of $383 on your $35,000 of student loan debt, at a 5.7% rate, means you’ll pay $46,014.
And your credit card debt? That math is even scarier.
So you take some massive action and start cutting down your living expenses. Then, you log in to the account with the highest interest rate and make an extra payment with the savings.
Also, you learn how important your credit score and credit history are. And specifically, you learn how much a good credit score can save you.
So, you sign up for a site like Credit Sesame that provides credit monitoring and personalized tips to increase your score.
Milestone #3: The Book You Can’t Put Down
You have some momentum going in your financial life. At the library, you find yourself in the 332s — the personal finance section.
A book catches your eye. You read the back cover and scan a couple of chapter titles. You check it out.
That night you start reading it and can’t put it down.
You think to yourself, “Wow. If I get this whole personal finance and investing thing, I can become pretty wealthy.”
You pick up a few tips here and there that allow you to pay off your debt faster. You start to understand how the stock market works.
But the big change this book brings is in your perspective.
You want to learn more. Do more.
For me, that book was The Bogleheads’ Guide To Investing.
Other books that can help shape your perspective:
(They’re all good. Read them all).
Learn more: The best investing books for beginners.
Milestone #4. You Pay Off A Debt Early
It’s Friday evening. Today was payday.
After getting home from work, you log in to your online no-fee checking account. And you realize there’s enough money to pay off one of your credit card balances in full.
So you log in to your credit card account. And you set the payment option to “Pay statement balance in full.”
You click “Submit Payment.”
You look around the room and make a little “woo hoo” sound. Then you head out to your favorite restaurant to celebrate.
Yes, you know the guac is extra. But you get it anyway. It’s a good night.
A month later it feels good not to have to make a payment.
Milestone #5. Personal Finance Is Becoming Fun
Your system, while simple, is starting to produce results.
High-interest debts are paid off using the debt snowball method. Cash is starting to accumulate in your bank account.
You’re actually having to decide what to do with your leftover money.
What a problem to have.
Milestone #6. You Build An Emergency Fund
You decide that the first thing you’re going to do with the money that’s left over is build an emergency fund.
Things have been going well. But there are a few things that could happen that could halt that momentum.
So to protect yourself, you start to build a three-month safety net.
You put this money into a savings account. You’re not going to touch it.
And you sleep better that night.
Milestone #7. You Start Contributing To Your 401(k)
With your high-interest debt a thing of the past, you start focusing on building for your future. And that means contributing to your 401(k).
At first, you decide to contribute up to your employer’s match. You log in a month later and realize that “free money” is a good thing.
But you don’t stop there. You set a calendar alert for three months and commit to increasing your savings rate by 1% when that alert hits.
This decision to incrementally increase your 401(k) contribution will be one of the smartest financial choices you ever make.
Pro tip: See if your 401(k) provider offers automatic escalation, which makes these gradual increases happen at a set time of your choosing.
Milestone #8. You Start Tracking Your Net Worth
When you’re paying yourself first, then spending less than you earn each month, your net worth can grow fast.
So, you use a free app like Trubill that helps you track your net worth over time.
You pop in once or so a month to review how things are going.
Milestone #9. You Start Thinking Strategically About Your Career
Things are going pretty well in your career. You enjoy your job but don’t love it.
To mix things up, you start freelancing on the side.
You pick up a few writing clients in your area of expertise. After doing good work, a client asks you to take on a few other side projects.
You’ll have to learn new skills, but the client trusts you and understands there will be a learning curve. Over the course of the next year, you add new skill after new skill — all while getting paid to do it.
A few years down the road, these skills become very valuable as you go on to start your own business.
Milestone #10. Your Debts Are Gone
You’re working hard in your career, earning money on the side, keeping your expenses low, and continuing your debt snowball.
And before you know it, you’re debt-free. No credit card, no car loan, no student loans.
It wasn’t exactly easy at first. But once you got momentum on your side, you couldn’t stop.
It’s an amazing feeling.
Milestone #11. You’ve Handled The Basics And Get To Start Asking “What’s Next?”
Up until recently, it was all about the past and present. You were trying to make and save enough money just to pay your bills and get out of debt.
But, today, you’ve handled these basics. You’ve gotten your debt paid off and you’re living below your means. You’ve got a system that’s working to make sure your bills are paid, and you’re making those all-important automatic contributions to your 401(k).
So, you start to look at the potential expenses that might come up in the next few years. A car, that trip you wanted to take before getting married (and then the actual wedding), Roth IRAs, and a down payment on a home.
It’s not like money to pay for these things is just going to appear. So, as a responsible person, you decide to take matters into your own hands. With that in mind, you pick one of these goals to start saving for.
Milestone #12. You Have “The Talk”
Living by yourself, your financial system was a finely-tuned machine. Money was coming in. Bills were getting paid. Money was being invested.
Then it all came crashing down.
You got married.
Now you’re two, not one.
You decide to combine your finances.
And your finely-tuned system needs some adjustments. A lot of adjustments.
You’ve now read over a dozen personal finance books. You even keep up with a few blogs.
Your spouse? Not so much. She just got out of a demanding internship program and hasn’t had a second to breathe — let alone to think about finances.
So, you tell your spouse about your optimized, tuned personal finance system…
Milestone #13. You Have Another Talk — And This Time, You Actually Listen
After last month’s big talk, what changed?
You realize that you have certain beliefs about money. And your spouse has entirely different beliefs.
Instead of talking about the tactical details behind managing your money (“let’s use this budgeting app,” “let’s set this budget for food,” etc.) this time you focus first on setting a shared vision.
This leads you to set financial goals together:
You end the discussion agreeing it’s a good idea to set a time to talk about finances once a month.
This monthly financial check-in is another small habit that pays huge dividends down the road. As you’ll come to learn, being on the same page as your spouse financially is one of the best personal finance hacks around.
Milestone #14. You Pay For Your New Car With Cash
With two incomes and no kids, things are going quite well.
Yes, you’re still learning about each other’s money management style but things have improved, as once a month you’re learning more about what works and what doesn’t.
One of your first big purchases as a couple is coming up: a new car.
Instead of asking how much car you can afford, you research which cars have the lowest cost of ownership. Then, you head to a dealership.
When the salesperson asks about financing, you casually mention, “Oh. No. We don’t plan on financing.”
It feels good.
Related reading: How to save for a car (faster than you thought was possible).
Milestone #15. You Learn About Financial Independence
An article on a major media site about how a couple retired in their 30s has you intrigued.
While most people in the comments section are making excuses and explaining why that’s impossible, you ask yourself a different question: “How is that possible?”
You learn that while difficult, it’s by no means impossible. That couple saved about 65% of their annual salary over 10 years.
You’re a long way off from saving 65% of your income. But still, the idea of financial independence won’t leave you alone.
Milestone #16. You Reach A 16% Savings Rate In Your 401(k)
Over the last few years, you’ve gradually increased your savings rate. At first, there was just enough room to make your 401(k) match.
Now the savings rate in your 401(k), which happens to be at 16% of your total income, is equal to the average savings rate of 401(k) millionaires.
Milestone #17. You Buy A Home
One lesson you learned when buying a car was that it was important to buy a car that in your budget — not the salesman’s.
You could have bought a more expensive car. But you chose a car you could afford.
You’re now applying the same concept to real estate.
With no debt, you can qualify for a pretty hefty mortgage. However, you go with a home you can absolutely afford.
You use a good rule of thumb, such as:
Limit your mortgage payment (including insurance, HOA fees and taxes) to 25% or less of your monthly take-home pay on a 15-year fixed-rate loan.
Just as you did on your other debt, when you go to set up automatic payments, you also fill in the “additional payment” box, so that you can start paying off your mortgage early.
Milestone #18. You’re Kinda Rich
You don’t feel rich. But after over a decade of full-time employment, some side hustling and smart investing, your net worth has grown.
You may not be a millionaire — but you’re on track.
You ponder what life would be like not having to work. It would be different, for sure.
Most importantly, it allows you to start optimizing your life more towards happiness and less towards money.
That feels good.