There are tons of different ways to reach your, better than the average savings goal. After all, we all want to be prepared for when things are bad financially or even to curb the desire to upgrade our living status. Average savings is awful low. Especially, since over 70% of Americans live paycheck to paycheck.
So, when it comes to yearly average savings, we all need some sort of guide on how much money to save or how to save especially at a younger age.
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According to a recent survey, 30% of Americans didn’t have more than $400 in their saving in case of an emergency. And one out of five Americans didn’t have any savings for covering an emergency.
With the inflation rate going up, we really need to plan our lives from financial aspects specially and be prepared for the future. For example, you want to start a new family and get married or even want a baby. The average cost can be anywhere between 5k to 15k USD keeping other expenses aside (raising your children, getting a house or an apartment and the list goes on and on).
Let’s talk about your child’s college education, the costs can be anywhere from 30,000 USD to 120,000 USD. Even if you don’t start a family, you will need some savings by your side after your retirement and to live comfortably in your older age.
PS. keeping things interesting, you can always grab a plane and spend a fun holiday with your saved money.
Average Savings by Age Group
According to a Fed survey held in 2019 by consumer finances, an average American has $5300 savings (the numbers can change according to household members and age).
Average savings for those younger than 35
Average savings for this age group were 11,200 USD according to the Feds Survey. Now, this is a tricky age group, it includes teenage students, college graduates as well as young entrepreneurs and professionals. So, we can’t come up with an average age by age.
So, we suggest they should have at least 1000 USD in their savings accounts for rainy days. That means enough savings to cover expenses for 3 to 6 months.
Having moderate or low savings in the 20s is very common for students and graduates as they are just doing part-time jobs and have to pay their student loans.
People in their 30s can increase their savings as they have paid off their student loans or have shifted from part-time to full-time jobs. That is the age for considering your goals and working very hard to achieve them. At this age, you should start to fund your emergency savings, start prepping for retirement, and save for a home or a car down payment. Your goals are always your guideline and can help you allocate your income according to your priorities.
Average savings by age (35 - 44)
The Feds survey held in 2019 revealed that people in this age group had an average savings of 28,000 USD in their savings accounts. That is no age to go rash as that is your peak earning time. You need to save for 3 to 6 months and must be able to save for retirement, and cover any emergency in case you lose a job, or have a medical emergency.
That is also a peak time when you should consider investing either in real estate, stocks, or anything else to help you after your retirement. It is time to make sure you have a budget set up and attempting to follow it.
Average Savings by age (45 - 54)
This survey revealed that an average saving in this age group was 48,000 USD according to the Fed’s Survey. At this stage, a person in his fifties must have 6X their annual income if they want to retire at 65 years. People below 50 should have around 90,000 USD in their savings accounts for retirement. it might not be a bad idea to see what you can do yourself instead of hiring every thing out.
We all need to be planning ahead. When we know that we can afford a purchase, we will feel better about making that purchase. As a result, our willingness to spend increases, and as it does, we become even more likely to spend. As we have said, inflation is caused by a combination of factors, including an increase in the money supply, higher rates of interest, and the rise of technology. Preparing for inflation by planning ahead will help you save money and build wealth.
By planning ahead, you can save yourself some serious headaches in the future. For example, if you were planning to build a new home in five years, you’d need to start saving now. This means making sure you have a healthy emergency fund, because if you don’t have a backup plan, you could be hit with a hefty price tag. Also, a better credit score can mean lower interest rates.
Average savings by age (55 - 64)
The 2019 Fed survey found that Americans between the ages of 55 and 64 had an average savings account balance of $57,800. At this age, most Americans are reaching their retirement years, and it is important to kick up your retirement savings.
General Rules for Saving
Your saving goals depend on your income and lifestyle goals and needs and there is no specific number on how much you should save each month. Although, a general rule of thumb is to save enough to cover 3 to 6 months’ expenses including bills and stuff. You need to carefully figure out your monthly expenses and then find out your 6 months’ expenses. That is how much you need to save at the moment.
So do your homework, make a strategy and work hard to reach your financial goals. Make a list of all those expenses that you need to cut to make enough room for saving even whether you are on a tight budget or not. Make a monthly budget, and keep track of all your expenses counting every single cent. That will help you realize how much money you are wasting and can eventually save.
The 50-30-20 Rule
So many Americans swear by this rule. According to this rule, you need to allocate 50% of your income for basic expenses like food, bills, and rent, and 30% for your luxuries like movie nights or parties, or luxury shopping. The final 20% should go to your saving account to make up for your house down payment, buy a car, or for a rainy day.
Now, let’s move one step further. Here you can get a bit creative and start thinking long-term. You can start depositing some money in your retirement account directly from your paycheck.
Final Words: Average Savings by Age
You can save lots of extra bucks by getting rid of unnecessary expenses like getting rid of subscriptions you no longer use, and gym fees that you don’t use. Direct your fun cash into your saving account. Almost 70% of Americans spend all their paycheck and don’t feel the pinch for saving. You can always start a side hustle and use that cash for your savings account. You can always work part-time for apps like uber or Lyft and dedicate your extra time to your future. You can even start freelancing and earn cash for your extra time and reach your goal for average savings for your age group.
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