Financial Milestones by Age: How to Prioritize Your Money

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As you go through different life stages (raise kids, buy a house, get divorced, re-marry, retire, prepare to die, etc.) your financial goals will probably change. Some of your concerns might be long term, like saving for retirement, and some could be short term, like saving for a down payment. 

Whatever your goals might be, there’s a good chance your priorities can be categorized based on your current life stage. Odds are, if you’re a young family, you’re probably thinking about paying for daycare and saving for your kid’s college. If you’re coming straight out of college, there’s a good chance you might be thinking about paying off those student loans. 

It can be helpful to have important financial milestones by life stage and rough deadlines in the back of your mind. Setting your priorities straight ensures that you won’t have to scramble at the last minute and potentially lose out on thousands of dollars in financial mistakes and poor planning. 

Of course these aren’t all set in stone. You can always make adjustments as needed based on your particular situation.

In this post, I lay out all the financial goals that you should have by major life stages. Keep these in the back of your mind so you can keep a road map of financial priorities as you go through life. 

Early Career Years

You’re just out of college, got your first job, and are (hopefully) becoming financially independent. While you might not have a lot of money now, a lot of financial choices you make now will have huge repercussions down the line. The early career life stage is the time older people always wish they spent time to figure out their finances.

Learn to Budget

When you start earning money for the first time, budgeting is one of the most important financial skills that you need to master. You should take some time to develop a suitable budget taking into account all your expenses and start building solid spending and saving habits. 

This includes tracking your expenses to see where your money is going, checking (but not touching) your investments, and monitoring other trends in your finances. If you want a free Excel template to get started, you can check out my free excel budgeting spreadsheet.

Build Up Your Savings and Set Aside an Emergency Fund

You never know when you’re going to get hit with an emergency (that also just so happens to be expensive). Dealing with an emergency is bad enough. You really don’t want to add financial hardship on top of that. 

Aim to build up cash reserves that can sustain three to six months’ expenses. You can start by saving at least 10% to 20% of your income every month or even a few dollars a week. This will help protect you from financial shocks like a layoff, medical emergency, or car accident.. 

Pay Off Debt and Build a Good Credit History

Another top priority is to pay off debt like student loans, credit card debt, or personal loans. Paying off debt is a key component of building your credit history. A misstep here could tank your credit score and can have long-term consequences on your borrowing ability in the future. This means you’ll have a hard time securing loans and any loans that you do secure will not give you the best rates. That’s important if you plan to buy a house in the future.

If you have credit card debt, that is higher priority than your student loan debt. Most credit card loans debts are three to five times higher in interest than the student loans, so you want to focus on paying those down first. 

Setup Insurance Plans

If you have kids or plan to have kids sometime soon, you might want to consider looking into life insurance. You don’t want to leave your family in financial jeopardy if something were to happen to you. 

Get yourself adequately insured with term insurance while your premiums are low, if your employer doesn’t offer any. Insurance premiums typically get higher as you get older. 

You’ll probably want to aim for 10-12 times your income in coverage. The term duration should also cover roughly until your kids are all off to college. 20 years should be about right for most people. 

Some other products such as auto insurance, disability insurance are also important to have. Dave Ramsey suggests eight types of insurance that are necessary to have. 

Start Investing

After you set up an emergency fund and have your budget under control, now you can start thinking about investing. Even though retirement seems very far away, it’s important to start thinking about those things now while you have time on your side. You want to start now to get the most benefit from the power of compounding interest. 

Long story short, compounding interest means money grows exponentially based on the number of years invested. If you invest in your 20s and don’t touch it until your 60s, returns of 4,500% are not uncommon (according to historical returns of the stock market).

You can check out our retirement investing guide for more info on that. That has all the basic information on why and how to save for retirement. 

Advancing in Career

These are the years when you’re going to start earning a sizable income (hopefully). This stage can last decades, from when you first start getting a couple of promotions at work to being a well-established specialist, manager, or team lead. 

Make sure you negotiate salary raises during this time. By not negotiating, you’re potentially leaving about $1 million on the table over the span of your lifetime. 

Maximize Retirement Savings

If you haven’t already, start maxing out your contributions to your retirement accounts. Since time isn’t on your side so much anymore, you will have to make up for that by contributing more. This should also be more achievable at this stage of life and on since you’re earning a bigger income. 

Working with a Financial Advisor

A financial advisor can guide you through retirement planning, investing strategies, tax advice, and more. Many individuals who actually could benefit from ongoing financial counsel don’t seek it. But studies show that by tapping the services of a financial advisor, you might improve your results by as much as three percentage points annually. 

Debt Management

Keep your ability to repay in mind while adding debt to maintain your credit score. You should not have to meet debt repayment obligations at the cost of your retirement savings, insurance payments, and essential savings goals. 

Try to avoid taking out any loans if you can. Borrow primarily for appreciating assets where it will help grow your net worth over time. The most common case of this is buying a house (that’s acceptable). Don’t take out a loan to buy a car or go on a nice vacation (yup, that’s a thing people do). 

Get Better at Investment, Saving, Budgeting

With an increased income, family to raise, and/or new expenses to take care of, you will need to reevaluate your budget according to your new savings goals.

Revise and fine-tune your budget periodically to reflect your income and need for savings. Review if your emergency fund is sufficient to cover your expanded family’s expenses. Invest the savings to construct a portfolio that is aligned to growth, income or liquidity needs of goals.

Well you might be earning a higher income, higher-income you still want to make sure that you’re not overspending. Just because your income increases two-fold, that doesn’t mean you can start increasing spending by four-fold. Stick to the smart financial habits that you’ve built up by now. 

Tax Planning

If you’re starting to get into investing, or are starting to get multiple income streams from a side hustle or business you started, you might want to look into optimizing your taxes. 

Here are some ideas to better manage your taxes:

  • Set up a Health Savings Account (HSA): A specialized savings account for health expenses 
  • Contribute to a 529 account: An investment account for your kid’s college fund
  • Invest in a 401(k) or IRA: Retirement accounts that have certain tax benefits over individual investment accounts. More on that here.
  • Claim all the deductions you can: Things like charitable donations, medical expenses, mortgages, and education can be used to lower your taxable income.
  • Report all sources of income: If you have a side hustle or run a small business, make sure you document everything and report all that income. Income from these sources might not have any income withheld, meaning it’s up to you to keep track of taxes owed.
  • Meet with a CPA: A CPA can offer specialized advice to optimize your taxes. Can be especially helpful for freelancers and business owners.

Family Building

If you get married and/or have children, that’s going to have a big impact on your finances. Kids aren’t cheap. Fortunately, this stage probably overlaps with the previous stage. So while your bills are getting bigger, you will also be getting a larger income to offset the costs. 

Have Adequate Insurance Coverage

Life insurance starts to become a higher priority once you start a family, especially when you have children. There are two types of life insurance, term insurance and whole life insurance. The first one is usually recommended because it’s more cost efficient. For a more detailed comparison, check out Dave Ramsey’s article

You should also check if your employer offers group term insurance as a benefit. You could also buy group term insurance and individual life insurance together if needed. You would also need to re-evaluate your other insurance policies and make sure your family is covered. 

Draw/Update Your Will

Work with a licensed attorney to draw up your will to make sure your assets and families are protected. Look into establishing a trust, which can be a good way to transfer your assets to your children not immediately after you die. 

If you haven’t already, you should also designate beneficiaries for any savings/retirement accounts you have. You want to make sure that your family has an easy time getting the funds that you left behind for them. 

You can also look into getting a power of attorney. This appoints someone to make decisions on your behalf regarding financial and business matters if you become incapacitated.

Start Saving for College

Look into opening up 529 accounts for your kids and making consistent contributions. A 529 account is a type of investment account that offers tax-free growth and withdrawals for education expenses. 

However, make sure you are contributing at least enough to your 401(k) to get your employer’s match. While your kids have the option to borrow for college, you don’t have the option to borrow for retirement.


This is around the time you’re planning to stop working. Ideally your house should be paid off, you’re debt-free, and you have a decent retirement fund saved up. Best case scenario you should be entirely self-sufficient. Hopefully you won’t have to rely on your kids to take care of you. 

Review Your Investments

When you’re young, you have more time to recover from huge dips in your investments. Since you don’t have as much time to recover when you’re older, you will want to go more conservative with your investments. As your investment horizon gets shorter, you may want to preserve what you have saved by shifting more of your investments into those that are less risky (like bonds). 

A common rule of thumb formula is 120 – your age = % invested in stocks. The rest would be allocated to bonds. You could also change the first number to 100 if you are more risk averse. You may also invest in different products that can generate a regular stream of income for you rather than a growth-based investment.

Have Adequate Health Insurance

As they get older, your risk of getting health problems generally increases. Adequate health insurance is critical since health costs can throw your income off rails. 

Plan Retirement Income/Expenses

Since you’re getting closer to retirement, you can start thinking about cashing out on those retirement accounts (401(k), IRA, Social Security, pensions, etc.). Look into how your age will affect the amount you receive from Social Security and retirement income distributions. You also want to be aware of the optimal rates to pull money from different retirement accounts to avoid getting hit with a big tax bill. 

Now would be a good time to talk to a Retirement Income Certified Professional (RICP). These guys specialize in helping people turn their retirement assets into income. That would save a lot of headache and research on your part with research and advice tailored to your particular situation.

Simplify Finances

Cut down on multiple accounts and investments, organize documents, update details and consolidate investments to a few relevant ones. Make sure all your financial documents are updated and accessible. You don’t want to have any money sitting in an account somewhere that you forgot about. 

Consider a Long Term Care Plan

If you are at a point where you need someone to take care of you, you may consider traditional long-term care insurance. This would provide nursing-home care, home-health care or other types of personal care for people over 65 who need supervision. 

The best age to purchase a plan is between 60-65. This should give you a nice balance between not purchasing too early and wasting money on premiums and waiting too late where health problems may prevent you from qualifying from many plans.


Long story short, each stage of life will have different priorities in terms of saving, investing, and spending. Regardless of where you are, make sure to stick to smart financial habits and have a solid plan in place. You don’t want to lose out on thousands or millions of dollars over your lifetime because of poor planning. 

Jenny Wang

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