7 Things You Should Know About Your Money by Age 35

One of the scariest parts of adulting is being responsible for your money — in other words, personal finance. With each decade comes new financial milestones, both big and small. But are you prepared to handle them? 

Regardless of where you started out in life financially, there are several money habits and pieces of info you should have a strong handle on as you enter your thirties. For starters, here are seven things you should know by the time you turn 35.

Knowing your net worth involves knowing both your assets and liabilities—that is, what you own and what you owe. Your debt shouldn’t be a mystery to you; neither should the amount in your savings account. 

Though it may not be exactly where you’d like, having this number in mind ultimately gives you a big picture of your financial standing. In that regard, your net worth functions as a starting point for planning how to reach your big financial goals. 

Financial coach Karen Ford stresses understanding the importance of investing by the time you enter your mid-thirties. If you haven’t already started, the time to invest is now, whether that’s in a 401k, Roth, traditional IRA, or something else. 

“Planning and investing even a small percentage of your income with each paycheck can yield you great wealth and better prepare you for retirement,” says Ford. The sooner you begin to invest — even just $100 a month — the better financial shape you’ll be in later on. 

On top of understanding the value of investing, you should also know how much you need for retirement. Why? This figure will give you an idea of whether you’re on track with your savings. Otherwise, you’ll be saving haphazardly, setting money aside with no real defined goal for financial security in your later years. 

To figure out how much you need, some experts advise aiming for saving 10 times your final salary. Of course, with unexpected job and career changes ahead, it may be difficult to calculate this figure. Thankfully, there are a number of online retirement calculators that you can conveniently plug your current and expected savings into. Or, for some human guidance, you can set up a consultation with a certified financial planner near you. 

Will Craig from LeaseFetcher advises knowing the ins and outs of credit scores — what they are, how to influence yours, and of course, what your own score is. 

Credit scores are crucial, because they’re essentially a number assigned by lenders to reflect how risky it is to lend to you. This means your credit score plays a big part in your financial health and purchasing capabilities. As Craig says, “Missing payments can negatively affect your credit rating, while paying back credit on time and in full can affect it positively. It can affect your chances of getting everything from a small loan to a mortgage.” 

Knowing how to create a budget is a must in your twenties and thirties. But of even more importance is knowing how to create a realistic budget that actually works for you. 

“Over time, your life situation will change and you may have to adjust your budget to fit your current situation,” Alayna Pehrson from Best Company says. “But having the right foundation is key.”

 For obvious reasons, it’s easier to stick to a realistic budget instead of one based on wishful thinking. Not only that, but having a sound budget makes planning for larger financial goals, like funding your child’s college tuition and retirement, more feasible. 

Research shows that the average American is ill prepared for unexpected events: 57% report having less than $1,000 in savings. 

To prepare yourself for the unexpected, it’s best to build up what is known as an emergency fund — a financial cushion equal to about three to six months of living expenses. Having an emergency fund means more financial security when the unexpected, like a car accident or sudden medical issue, comes up. Without one, you’ll be scrambling to pay these expenses, and may even find yourself in more debt than you started with. 

By 35, compound interest should be your favorite financial term. Why? You can think of it essentially as free money. According to financial planner Lauren Zangardi Haynes, “As your invested assets earn dividends and interest and you reinvest those dividends and interest payments, then your earnings will start to make money for you.” 

Thanks to compound interest, you may be “better off starting earlier and saving a smaller amount of money on a regular basis versus starting later and saving more money.” This powerful tip means that any money invested in your twenties will already see substantial rewards by your thirties.

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