Money is a simple thing. You earn it by working. You spend it on stuff. Anything left over goes into your savings account/investing account/under the mattress.
When you're 21, money is harder - you're typically not working, yet you want to spend it on stuff, like beer.
When you're 28, money is easier - you're likely working, but still living a little bit like in college (with roommates sharing rent, not buying expensive cars, etc.).
And by the time you are 35, money should be a simple thing. You should earn more than you spend. You should have developed at least one additional income stream beyond working. And you should have a positive net worth.
But if you're still broke at 35, here are 10 likely culprits that you need to fix ASAP:
1. You're Still Earning "Starting Pay" At Your Day Job 10 Years Later
I hate dealing with pay and salaries. Everyone keeps it so secretive, and you work for a company whose job is to get the most out of you for the least amount possible. They don't want you to share your info, and they don't want you to know what others make.
On the flip side, the first 10 years of your career are some of the most important to try and boost your income as quickly as possible. The average starting salary for the class of 2014 was $48,707. But 10 years ago, when you graduated, the average starting salary was $39,488. If you barely kept up with 3% raises, over 10 years you'd still be at just $53,068 - not much higher than the newest entrants to the workforce.
Depending on your skills and what you've done for your company, now is a great time to start asking for a raise. You should also consider looking at sites like Salary.com and Glassdoor.com to see how your pay compares to similar positions.
2. You're Friends Are Hurting You Financially
You are the sum of the five people you spend the most time with. Heard that phrase before? Jim Rohn was on to something when he said this, but he wasn't directly talking about money. However, this applies just as much to money as it does success, love, and everything else in life.
If you're friends are out spending, buying fancy things, and going on crazy trips, our natural instinct is to try and keep up. We don't want to be left out of the "herd". But this can have massive consequences financially. The "keeping up with the Joneses" mentality has done in more people and families than most other financial problems.
If you're still broke at 35, now is a great time to assess the financial habits of your friends, and see how they are rubbing off on you. Struggling to find an answer? Now's a great time to put together a system of savings.
3. You've Failed To Network
Beyond your friends, the key to success at work is to have a great network of people around you. If you're still stuck at your starting pay, and think the best next move is to leave your company, you need a network to help you get that next job. The #1 way most people get the "next" job is through a contact, friend, acquaintance, or someone in their network.
Don't fret though. You can still put together a network of business contacts at 35. Get on sites like LinkedIn, create a profile, and start connecting with people you've worked with in the past. Make sure you look for ways to help others and connect them with business contacts, and in turn, you'll be able to leverage that network soon.
4. You Enjoy Smoking And Drinking Too Much
Everyone has vices, but not every vice is as expensive as smoking and drinking. These can seriously put a dent in your wallet every year.
It's estimated that a smoker, on average, will spend almost $2,000 per year on cigarettes.
Someone who regularly drinks will likely spend roughly $457 per year on alcohol.
In your first 10 years after graduation, that amounts to roughly 10% of your take-home pay or more! Imagine if you simply cut out those two vices and saved that money each year for the last 10 years. You'd have $30,500 saved. That's a lot of money on booze and cigarettes.
If these vices are keeping you broke now, just realize that the costs will continue to rise as well. More states are taxing booze and cigarettes, and the cost of health insurance and health care in general will continue to rise. Now's the time to make a change.
Many companies offer free cessation plans if you're looking for a way to quit. Check with your HR manager or your employee benefit site. This is a great place to start to begin saving some money.
5. You Bought A Fancy Car After Graduation
One of the ways that a lot of 20-somethings spend their money after graduation is a new car. This is an area that I fell victim to when I bought my first new car after graduation. Many of my friends did the same thing. We figured, "hey, we make 'good' money now, why not?"
Well, the why not part is easy. Cars lose value and cost you money from day one. Then, you have to spend money on them to keep them running - gas, maintenance, and more. Cars suck, but most people need them to get to work and live life.
But that doesn't mean you need a fancy one. Most people would be very well-to-do buying a used car, especially a certified used car that will last a long time. This will not only be less expensive, but it will hold more of it's value over time.
If you're broke because you spent too much on a car, the options are simple:
1. Sell the car and buy a cheaper car. This option makes sense if the monthly payments, or maintenance, makes it cost-prohibitive to continue to own.
2. Don't buy a car, but keep the one you have forever (or until the car dies). If you just bought an expensive car years ago and are regretting it, it might make sense to hold on to it. It's already done a lot of depreciating, and if it still runs well, there might be no reason to go out and buy a new car. Just live with what you have for a long time.
6. You Are Barely Making Minimum Student Loan Debt Payments
Making only the minimum payments on any debt is the simplest way to stay in debt. The minimum payment makes little progress towards paying the debt. It's even required by law to tell you how long it will take to pay off your debt on the minimum payment - check it out on your next statement, I bet you'll be shocked.
If you've been in debt 10 years on your student loans, now's the time to start taking control and making as much more than the minimum payments as possible. This involves a couple things. First, make sure you're on the right repayment plan for your needs. If you can't even afford your payments now, double check this ASAP.
Second, look at simply putting more towards your student loans. Save until it hurts. If you have cash to spend on "stuff", you have cash to pay off your debts and start building real wealth.
Check out our resource on Student Loan Debt to learn more.
7. You've Maxed Out A Credit Card
Along the same lines as not paying back your student loans, living off a credit card is a sheer sign of financial doom and gloom. Yes, it might have been simple to throw down your credit card when you went out with your friends, but now that you're 35 and have a maxed out credit card, chances are you're regretting those choices.
Credit cards can be a great way to stay organized and to earn rewards for your everyday spending. But if you take advantage of them, they'll bite you financially. If you've maxed out a credit card, now is the time to stop, reassess your spending and income, and look to pay off the debt.
At 35 you should be working with a positive net worth, so pay off that debt as quickly as possible using the same strategies as your student loan debt.
8. You're Not Organized (Financially)
The key to avoiding most major financial issues is to simply be organized. If you know what you have, where you have it, and you consistently check it to see where you are, you'll likely continue to move in the right financial direction.
Most people with lots of debt and little in assets also don't know what they have and where. If you struggle to know what's in your checking account, on your credit cards, how much student loan debt you have, and the balance of your 401k, you need to get financially organized.
There are several different strategies to become financially organized, but you can start simply: put all of your accounts in one place so you can see an overall balance of what you have. I recommend using free tools like Mint or Personal Capital to help with this. Then, figure out a system to organize your paperwork.
When you're ready, check out our Ultimate Guide to Financial Organization to setup a full-proof system that works.
9. You Lack Money Goals
Do you have money goals? If you're still broke at 35, chances are no. Money goals are a great way to build wealth, because they help you build positive momentum towards something.
Early in life, your financial goals can be simple: get out of debt. Save for a house. Save for a vacation. Contribute $X to a Roth IRa. Save $X for my children's 529 plan.
Goal setting is a great way to build real wealth, because it aligns your money habits with your personal dreams and ambitions. Even the laziest person on earth has some basic goals they want to meet, but writing them down and making them concrete is powerful.
Take it up a notch and share your goals and get an accountability buddy. That will really help you move the bar in the right financial direction.
10. You're Not Side Hustling
Finally, if you're broke at 35, you're clearly not side hustling. While there is always going to be a fixed limit to how much you can save (I mean, you can't live on $0 per month), there is no limit on how much extra you can earn. And there are countless ways to earn more money - look, here's 50+ Ways To Earn More Money Right Now.
Earning extra money on the side of your day job (aka Side Hustlin'), is a great way to start building real wealth. That extra money can go a long way to achieve a variety of your money goals - help you pay off debt or start saving for retirement. Once you have some money goals and are motivated to achieve them, look for ways to boost your income with your skills.
There are countless stories of people earning $3,000 per month, or even more, simply by side hustling on the side of their day job.
Check out our Earn More Money page where you can look at our specific strategies that can help anyone earn an extra $100 per month right now.
Are you still broke? Why, and what are you going to do differently?
Editor: Clint Proctor Reviewed by: Chris Muller
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.