This year, I will be turning 25 for the 16th time. For those that don’t want to do the math, I am turning the big four ohh. Yes, I am old and I am starting to feel that way too. I don’t really want to admit it, but in reality, this is the case.
 

For my last birthday, I shared 25 fun facts about me, an idea that I borrowed from Erik, The Mastermind Within. For this birthday, I feel that I’ve hit a major milestone in my life. So I thought that I’d share some of the financial milestones that I had achieved or hoped to have achieved by my 40th birthday.
 

Forty milestones seem like a lot and it is. To make it more meaningful, I’ve categorized the financial milestones into four levels. The first level is the basic financial milestones, which I believe that by the age of 40, everyone should be able to achieve. The next level is the disciplined financial milestones. Anyone with a bit of self-control and motivation should be able to achieve too.
 

The next level is a bit more challenging, but with some hard work and determination, nothing is impossible if you’ve decided to take on the challenge. I have a very competitive personality and I want to at least be above average in everything that I do. It may sound a bit egotistic, but this is what drives me to achieve more in life. Hence, the above average financial milestones are the achievements that will put you in the above average group if you can achieve them.
 

Last, but not least, the ambitious financial milestones are really ambitious I guess. The more that you can achieve in this category, the better off you’ll be and the faster you’ll achieve greater wealth and financial independence too. So without further ado, let’s see what this list consist of.

The Basic Financial Milestones

40) Understand how credit score and history works: In our modern society, your credit score and history is your financial reputation. The higher your credit score and the pristine your credit history are, the better the financial products (such as mortgage rate) you’ll be offered. A better credit score (above 700) and history can potentially save you tens of thousands over your lifetime. Achieved
 

39) Understand the “pay yourself first” concept: When you get paid, where did the money go? If none of it was going towards any of your accounts (Savings, TFSA, RRSP), then you’re paying other people first and are last in line to receive your hard earned money. Change the script by “spend what’s left of your savings” instead of “save what’s left of your spending.” Achieved
 

38) Understand compound interest for both savings and debt: The simple concept of compound interest is that when you save, your money earns interest. Over time, the interest that your money earned also earns more interest on top. The opposite is also true when you have debt. If you have outstanding debt, you’ll pay interest on the debt. Over time, the interest that you paid on your outstanding debt cost you even more if you don’t pay it off. Achieved
 

37) Be on the same financial page with your spouse: Do you and your spouse have the same money philosophy on both spending and savings? Do you talk about money on a regular basis? Do you manage your money together? I am embarrassed to admit that I can’t answer yes to all these questions. However, I am working hard to ensure that our finances are in great shape. Hoping To Achieve
 

36) Have an emergency fund: If you have about three to six months of your expenses set aside to cover unforeseen events, then have you an emergency fund. For me, I have a different philosophy. Instead of putting that money in a savings account, I actually invest that money and build access to funds instead. By doing this, my money is working harder to earn more and I still have access to an emergency fund if I need it. Achieved
 

35) Track your incomes and expenses: I have two spreadsheets. One to keep track of all my bills and to make sure that all bills are paid in full and on time. The second spreadsheet is to manage the different bank and investment accounts. I want to ensure that I have sufficient funds to pay my bills and direct all the extra funds to the appropriate account to maximize the efficiency of my money. Achieved
 

34) Know how to file your own taxes: You don’t have to do the actual filing yourself. You just need to be familiar with the rules that will help you pay the minimum amount of income taxes – legally. I am not trying to show off here, but with my income tax knowledge, I only paid about 12 cents for every dollar that I earned. The more knowledge you have in this area, the more money you will keep in your pocket. Achieved
 

33) Learn how to invest: It doesn’t matter what you do, your savings won’t grow much if you keep it in a savings account. Learning how to invest is not difficult at all, I assure you. Here’s my basic investment concepts post to help you get started. Achieved
 

32) Calculate your net worth: Do you know if you are worth more today than you were at the same time last year? Are your savings growing at a reasonable rate to allow you to at least have the option not to work for money when you are at the age of 65? The simplest way to calculate your net worth is to add all your assets and deduct all your debts. What you have left over is your net worth. Achieved
 

31) Paid off your student loan debt: I am not trying to discriminate against anyone here, but at this age, you should be accumulating and saving rather than paying off your student loan debt. Achieved

The Disciplined Financial Milestones

30) Always pay all your bills in full: If you’re not able to pay your bills in full, there are two possibilities here. You’re either overspending, or you’re not earning enough income to support your current lifestyle. To control your spending, you need to adhere to a budget. To make more money, you can either ask for a raise or find a higher paying job or increase your sources of income. Achieved

 

29) Investigate the best retirement savings option(s): On top of my head, here are a few saving vehicles: CPP, a pension from your employer, RRSP, TFSA, Real Estate and Non-registered investments. Each of these saving vehicles can provide you with a decent income at retirement. The best option is to have as many source of income as possible so that you are not dependent on any one source as your major retirement income. Achieved
 

28) Automate your saving: The best way to grow your savings is to automatically allocate a portion of your regular income to your savings account. This way, you’ll learn how to live within your means and will never miss the money that you never had access to in the first place. Achieved
 

27) Having sufficient insurance coverage: Nobody wants to plan for the worst case scenario or their death. The way that I look at it, insurance (life, critical illness, health, etc.) is not there to protect you. It’s there to protect the people you love in case something happened to you. If you love them, then take care of them when you’re gone. Simple as that. Achieved
 

26) Own your primary home: Not everyone agrees that owning their primary residence is a financial milestone. In my opinion, more often than not, you are better off if you own your home. For me, owning my primary home has been one of the best financial decisions that I’ve ever made. I can say that I couldn’t have become a millionaire before the age of 40 if I didn’t own my primary home. Achieved
 

25) Have a will in place: Once again, this is similar to insurance. You have a will in place to ensure that your estate is divided fairly to the people that you want to leave your assets to without them having to fight tooth and nail to get what they are entitled to. I must admit, I dropped the ball on this one because I am just plain lazy on this front. Need To Achieve
 

24) Save at least 10% of your income consistently: After joining the workforce for a year, I automated my savings and was able to save at least 10% of my income ever since. I never missed the money and I got in the habit of living without having access to that 10%. The good news is that when my income grows, my 10% savings also grows proportionally too. Achieved
 

23) Being able to fully pay for your major purchases without going into debt: Except for my mortgage, I haven’t had any consumer debts the last decade or so. I was able to fully paid for both of the purchases of my brand new vehicles in 2006 and 2015. Achieved
 

22) Accumulated $300K in net worth: Based on statistics from the Statistics Canada website, the median Canadian household net worth was 295K in 2016. Hence, if you’re average, then you should be able to have accumulated this much in net worth. Achieved
 

21) Being consumer debt-free. No credit card or line of credit or car loan: As mentioned in a few points above, I always pay my bills in full and I saved for all my major purchases. I only have two types of loans: my mortgage and investment loans. Achieved

The Above Average Financial Milestones

20) Create an investment policy: As I mentioned in point #33 above, to grow your money, you need to learn how to invest. The next step is to set up an investment policy to guide your investments. The policy acts as a guide to ensure that you are not taking more risk than you need to and not owning an investment that you don’t understand. Achieved
 

19) Lower your income tax: When you pay less income tax, you’ll have more money in your pocket. Plain and simple. This, in turn, leads to more money to invest and grow your wealth. For further reading, check out how earned more money and pay less income tax than my spouse. Achieved
 

18) Saved at least $10K for your kid(s) RESP: For parents with kids, one of the best investments that you can make is in your kids’ education. For every $2,500/year that you contribute to your kids’ RESP the government will provide a grant of $500 to your kids’ RESP. Achieved
 

17) Calculate the net worth number that you require to achieve financial independence: Unless you want to work until you die, it’s best to calculate the net worth that you need to achieve financial independence. You don’t have to stop working once you have achieved financial independence, but it’s great to have the option to work because you want to and not because you have to. Achieved
 

16) Set up a vacation fund: I was late to the game for this financial milestone. I didn’t have one set up until last year as I don’t take many vacations previously. As my net worth grows, I am making it a priority to balance between saving for the future and enjoying life now. Achieved
 

15) Invest in both the financial and real estate market: The first thing that any investment advisor will tell you is diversify, diversify and diversify. That means spreading your asset into different types, different sectors, and different geographical locations. I am happy to share with you that half of my net worth is in real estate and the other half is in the stock market. Achieved
 

14) Built a $200K in RRSP investment portfolio: All my automated savings go directly to maximize my RRSP contribution on an annual basis. This way, my money gets to grow tax-free until I withdraw and I get a huge tax refund when I file my income tax at the end of the year. Achieved
 

13) Accumulated $500K in net worth: If you want to be above average, then you’ve got to do more than what an average Canadian does. The average Canadian household is worth $295K in 2016, so saving 66% more than the average Canadian household put you in the above average category. Achieved
 

12) Max your annual RRSP, RESP and TFSA contribution limit: Maximizing all these registered accounts will put you on a great path to achieve financial security for both yourself and your family. Your money will get to grow tax-free and you will get a good chunk of money in the form of grants and tax refunds. Achieved
 

11) Save at least 25% of your income consistently: When you maximize the contribution to all the registered accounts in step #12, you’re pretty close to saving a quarter of your income. If you’re not there yet, why not save bit more and try a bit harder to reach a saving rate of 25%? Achieved

The Ambitious Financial Milestones

10) Have a plan to minimize your income tax during your retirement: During your retirement, you’ll most likely be drawing down on your RRSP accounts and balancing your income with CPP and OAS. The way how you structure your savings before retirement determines how much taxes you’ll be paying during retirement. So plan ahead to keep more money in your pocket. Achieved
 

9) Have a financial plan to achieve financial independence before the traditional age of 65: I have a plan to achieve financial independence by the age of 48. I would need to reach a net worth of $2M. At this point, I am about 70% there and am still on track to reach FIRE by 2026. Achieved
 

8) Earn a combined six-figure income from all your income sources: I worked really hard to increase both my income and sources of income. Currently, I have seven sources of income (employment, business, rental, dividend, options, capital gain and interest) Achieved
 

7) Your kid(s) RESP is fully funded: If I can only leave one thing to my kids, it’ll not be an inheritance. I’d like give them the gift of a free education. I strongly believe that “if you give a person a fish, you’ll feed them for a day. If you teach them how to fish, you’ll feed them for life.” This is why I set my goal to ensure that my kids have the opportunity to obtain a university degree. Hoping To Achieve
 

6) Increase your net worth by 10% on an annual basis: You’ll be worth twice as much in 7.2 years if you keep up with this pace. I have been able to consistently achieve this financial milestone about 90% of the time since I started working. Achieved
 

5) Being Mortgage free: If you are mortgage free, you’ll most likely be debt-free. Wouldn’t it be nice to live debt-free and knowing that no one has access to your asset other than you? Currently, I do have the financial strength to pay off my mortgage. Since I am a huge borrow to invest advocate, can’t imagine me being mortgage free anytime soon. May Not Want To Achieve

 

4) Accumulated $1M in net worth: If you want to build financial security and achieve financial independence, this is the net worth number to target. It’s definitely possible if you try. The beautiful thing is that there is no limitation on when you can start saving. Achieved at age 38
 

3) Built at least 7 sources of income: Is having 7 sources of income better than 3? Not necessarily. However, if you have more sources of income and all of the sources produce a similar amount, then losing one source is not a very big deal. If you have one or two sources and lose the major source of income, your finance may suffer. Achieved
 

2) Your passive income is at least 50% of your main source of income: Right now, my main source of income is still more than 50% of my overall income. To reach my financial independence goal, my passive income will have to continue to increase. At my current rate of growth, I should be able to get there in three to five years. Hoping To Achieve
 

1) Save at least 50% of your income: I have seen quite a few personal finance bloggers achieved a saving rate anywhere from 50% to 70% of their income. With two young kids and living in one of the most expensive cities in Canada, I probably won’t be able to achieve this. Even if the odds are stacked against me, it doesn’t mean that I can’t try. Hoping To Achieve

My Two Cents

Personal finance is personal. Whether you’ve achieved 8 or 38 of the 40 goals, it’s not really that important. What’s more important is that you are living a responsible, balanced and happy life. Use this financial milestones list as a guide to help or motivate you to do better if you need something to push you to work harder and to achieve more.
 

So readers, what do you think of this financial milestones list? Do you agree with the list’s categorization? Are there any financial milestones that should be added to this list?