I Asked An Expert Where I Should Be Financially By The Time I'm 35 And I've Got Some Work To Do (2024)

While Walsh is going to help guide us through a few financial ideals, he gets that everyone is starting from a different place.

"The fact is that everyone starts with different levels of debt, works in different industries, and lives in different locations. ... I am much more concerned about their finances now and over the next 30 years than what they did in their 20s."

THANK YOU, BRIAN.

Here's a little secret: Financial health is less about how much money you make and more about how you use the money you have. Figure out what works for you: Do you like to track every penny? Or maybe you prefer to take care of all your bills, contribute to your savings, and then let yourself spend any surplus freely. Either way, you'll need to have a system that works for you.

"I’ve worked with people who made a ton of money but spent it all, and I’ve also worked with people who did not make very much but still saved a ton. Granted, higher income makes it easier to create a surplus assuming your lifestyle is in check, but the surplus is the key," Walsh says.

Walsh explains, "Bad debt is any debt with an interest rate greater than 7% such as credit cards or personal loans. Good debt is any debt with an interest rate less than 7% such as student loans or mortgages."

So in an ideal world (and obviously there's some wiggle room here), by the time you're 35 you'd have no bad debt and anything classified as good debt would be manageable. For the latter, Walsh says, "Good debt is fine to have as long as the payments fit comfortably in your budget, allowing you to save for the future."

One of the most important things you can do for yourself financially is to work toward saving enough money to cover your monthly expenses for three to six months. Walsh clarifies that "If their income is stable or they are in a dual-income household, then three months would be ideal. If their income fluctuates or they are in a single-income household, then six months would be ideal."

Often called an "emergency fund," this money will literally save you if you lose your job, face unforeseen expenses, or go through a life event that forces you to stop working.

If putting aside that amount of money seems impossible, keep in mind that recent research found that onlyabout 40%of Americans can cover an unexpected $1,000 expense, so if you don't have the cash, you're far from alone. The key is to start building up an emergency fund. Maybe you start by slowly working toward $500, then set your sights on $1,000, and so on. Plus, working on building up a financial cushion will make you feel so much more secure.

Insurance is easy to overlook, especially when you're young, but by age 35 you should have a few key policies in hand.

"Everyone should have health, disability, property, and casualty insurance," says Walsh, noting that "The key piece of insurance I see people overlook is disability insurance. As a young professional, your ability to earn income for the next several decades is your most valuable asset. Protect it accordingly."

He adds that if your spouse or child relies on your income, then you should have life insurance as well.

Saving for retirement is important, but Walsh notes that you should first check those foundational finance to-dos off your list — clearing up bad debt, setting up an emergency fund, and getting insured.

If you're there, he says, "A 35-year-old should strive to put away between 15% and 20% of their income toward retirement. This is a good starting point, but if you are a high earner, started saving later, or want to retire early, then it will need to be higher."

That being said, if you look at the numbers and can tell that putting aside 15%–20% would be too restrictive, it might be a sign to look for ways to earn more. Maybe that means finally asking for that raise, picking up a side hustle, or keeping your eye out for a new job.

Exactly how much money you should have in your retirement account by age 35 varies depending on who you talk to. Some advisors suggest that by the time you're 35, you should havedouble your current salary in retirement, while others say having the amount of your salary in savingsis sufficient. Meanwhile, theTransamerica Center for Retirement Studies released a 2020 report that found thatthemedian retirement savings for millennialswas $23,000 (while the average millennial incomethat year was$47,034).

There are a lot of intimidating "benchmarks" floating around, but the important thing is that you just start saving. And keep in mind that the amount of money you'll actually need for retirement is completely dependent on what sort of retirement lifestyle you envision for yourself.

Once you commit to a plan that will get your retirement savings to a place you're comfortable with, then you can focus on other big financial goals. "The key is not to sacrifice retirement savings to fund other goals such as paying for college or buying a vacation property," says Walsh.

It's easy to get focused on buying a house and starting to build equity, but before you go there, Walsh says you should make sure you have a "solid financial foundation in place."

That means that you've already paid off any bad debt (credit cards, personal loans), have an emergency fund (three to six months of expenses saved), and have all the insurance you need.

If your financial foundation is solid, it might be time to consider building your equity by buying a home. But Walsh is quick to note that everyone's situation varies.

"If they plan on living in their current location for the next five to seven years, then owning a home might be a good idea because it would have a lower net cost than renting. On the flip side, if they may move or drastically change their lifestyle in the near-term, then they might not want to buy a home because renting would be more efficient," he says.

Before you say goodbye to your roommate or buy a bigger house, make sure you'll still be able to put 20% of your income toward your more basic financial goals: continuing to pay off debt, putting money toward your retirement, funding your education, etc.

Everyone is different; for example, Walsh says, "Some people have larger amounts of debt and other essential expenses such as childcare, so in order to hit that 20% they have to spend much less on housing."

If you still have a surplus of cash after you've taken care of the financial necessities, investing may be the solution. There are plenty of things you can invest in, including real estate and the stock market.

"Historically, investing has offered the highest returns, so it is imperative that people invest when trying to achieve long-term financial goals," says Walsh.

Thirty-five may feel young, but if you have kids, you should to prepare for your final days by setting up a will.

"Anyone that has a child should have a will, so at a bare minimum they identify a guardian if anything happens. Beyond that it really depends on their financial situation and complexity," says Walsh.

It's never fun to read about all the things you should have in order, especially since everyone's financial and life situation is different. BUT it's important to remember that you don't have to go at this alone.

"It’s absolutely ideal for everyone — including someone in their early to mid-30s – to look to a credentialed expert for support," says Walsh. "The process of finding, vetting, and selecting someone can often feel overwhelming, but chances are someone in your broader network might be working with an advisor they highly recommend."

To start, check with your employer; they might offer financial well-being benefits and access to a financial planner. Or, depending on your income, you might be able to get free financial advice and counseling from Operation HOPE.