It’s a question many of us ponder: How Much Money Does The Average American Have tucked away? Knowing where you stand financially often starts with understanding the broader landscape. Data from the Federal Reserve’s 2022 Survey of Consumer Finances offers a revealing snapshot: the average American family holds approximately $62,410 in transaction accounts, encompassing savings, checking, money market, and similar accounts.
However, this figure, while informative, paints only a partial picture. The term “average” can be misleading as it’s heavily influenced by both very high and very low savings balances. Moreover, this number excludes investments like retirement funds, brokerage accounts, and home equity. To truly grasp the financial health of Americans and where you fit in, we need to delve deeper into the factors that cause savings to fluctuate.
Average Savings Balances: It’s Not One-Size-Fits-All
Several key factors significantly impact how much the typical American has saved. Let’s break down the average savings across different demographics to gain a more nuanced understanding.
Savings by Age Group
Age plays a significant role in savings accumulation. Generally, as Americans age and progress in their careers, their savings balances tend to increase – until retirement years.
| Age group | Average Balance |
|---|---|
| Under 35 | $20,540 |
| 35 to 44 | $41,540 |
| 45 to 54 | $71,130 |
| 55 to 64 | $72,520 |
| 65 to 74 | $100,250 |
| 75 or older | $82,800 |
As you can see, those in the 45-54 and 55-64 age brackets typically have the highest average savings, reflecting peak earning years and accumulated savings. Balances tend to decrease after age 75 as retirees start drawing upon their savings. Younger individuals, under 35, understandably have lower average savings as they are often earlier in their career paths, focusing on establishing themselves and potentially facing student loan debts.
Household Size and Savings
Family dynamics also heavily influence savings habits. Household structures, particularly the presence of children and marital status, correlate with different average savings amounts.
| Type of household | Average Savings Balance |
|---|---|
| Single, no children (under 55) | $19,320 |
| Single, no children (over 55) | $37,220 |
| Single with one or more child | $16,800 |
| Couple, no children | $103,140 |
| Couple with one or more child | $73,890 |
Couples without children, particularly those over 55, tend to have the highest average savings. This can be attributed to dual incomes and fewer dependents. Single parents under 55, on the other hand, often face the lowest average savings balances, likely due to single incomes needing to stretch further to cover household and childcare expenses.
The Racial Wealth Gap and Savings
It’s crucial to acknowledge the persistent racial wealth gap in America, which significantly impacts savings. This disparity is reflected in average savings balances across different racial groups.
| Race of respondent | Average Savings Balance |
|---|---|
| White | $80,040 |
| Black | $13,370 |
| Hispanic | $15,710 |
| Other | $45,810 |
Data reveals a stark contrast, with White respondents having considerably higher average savings compared to Black and Hispanic respondents. This highlights systemic inequalities and historical disadvantages that continue to affect wealth accumulation and savings opportunities for minority groups.
Education’s Impact on Savings
Education level is strongly linked to earning potential and, consequently, savings. Higher education often translates to higher income and greater financial capacity to save.
| Highest education level completed | Average Savings Balance |
|---|---|
| No high school diploma | $9,130 |
| High school diploma | $23,380 |
| Some college | $33,410 |
| College degree | $116,010 |
Individuals with a college degree demonstrate significantly higher average savings compared to those with less education. Completing a college degree more than doubles the average savings of someone with only a high school diploma, and is over ten times more than someone without a high school diploma. This underscores the economic benefits of higher education and its role in building financial security.
Homeownership and Savings Habits
Homeownership is another factor associated with higher average savings. Homeowners typically exhibit stronger savings habits compared to renters.
| Housing type | Average Savings Balance |
|---|---|
| Owns | $85,430 |
| Rents | $16,930 |
Homeowners, on average, possess significantly larger savings balances than renters. This could be due to a combination of factors, including the financial discipline required for homeownership, the wealth-building aspect of owning property, and potentially demographic differences between homeowners and renters.
Why Your Savings Balance Truly Matters
Understanding average savings is insightful, but why should you care about your own savings balance? Here are key reasons why building savings is crucial:
Financial Security and Emergency Preparedness
Perhaps the most vital reason to save is to create a financial safety net. Financial advisors often recommend building an emergency fund to cover 3-6 months of living expenses. This fund acts as a buffer against unexpected financial shocks like job loss, medical emergencies, or urgent home repairs.
High-yield savings accounts are ideal for emergency funds. They offer easy access to your money when needed while providing a better interest rate than traditional savings accounts, allowing your emergency fund to grow over time.
Achieving Life Goals
Savings accounts aren’t just for emergencies; they are also essential tools for achieving your financial goals. Whether it’s a down payment on a house, a new car, funding your children’s education, or a dream vacation, savings accounts provide a secure and accessible way to accumulate funds for these milestones.
Peace of Mind and Reduced Financial Stress
Knowing you have savings provides significant peace of mind. Financial stress can negatively impact your overall well-being. Having a healthy savings balance empowers you to handle financial challenges with greater confidence and make sound financial decisions without panic. This proactive approach to financial security leads to a more stable and less stressful life.
Practical Tips to Increase Your Savings
Feeling like your savings could use a boost? Here are actionable strategies to help you grow your savings balance:
Master Budgeting Basics
Effective budgeting is the cornerstone of saving. Creating a budget helps you track your income and expenses, identify areas where you can cut back, and allocate funds specifically for savings. Popular budgeting methods like the 50/30/20 rule (allocating 50% to needs, 30% to wants, and 20% to savings and debt repayment) or zero-based budgeting can provide structure and guidance.
Set Clear Savings Goals
Having specific savings goals provides motivation and direction. Instead of vaguely aiming to “save more,” define concrete goals like “save $5,000 for a down payment in 12 months” or “build a $10,000 emergency fund.” Clearly defined goals make saving more tangible and achievable. Utilizing budgeting apps can also help track progress and stay motivated.
Automate Your Savings
Automation is a powerful tool for consistent saving. Set up automatic transfers from your checking account to your savings account each payday. Treat savings like a non-negotiable bill you pay yourself first. Automating this process removes the need for manual transfers and ensures consistent contributions to your savings, making saving effortless.
Overview: Understanding the Average American Savings Landscape
The average American savings balance is a complex figure influenced by a wide array of factors, from age and household structure to race, education, and homeownership. While the average of around $62,410 provides a benchmark, it’s crucial to understand the significant variations across demographics.
Remember that the Federal Reserve data excludes retirement accounts and represents an average, skewed by high and low earners. For a broader view of financial well-being, exploring the average American net worth can offer additional context.
Ultimately, whether your savings are above or below the average, the most important aspect is building a savings plan that aligns with your individual circumstances and financial goals. Focus on establishing a solid emergency fund and consistently working towards your financial future.
Average Savings Balance FAQs
What is considered a good savings account balance?
It’s less about matching the “average” and more about meeting your individual needs. A widely recommended guideline is to aim for an emergency fund covering 3-6 months of your essential living expenses.
How can I save more money if I’m on a tight budget?
Saving on a tight budget is challenging but achievable. Focus on making small, consistent changes. Identify discretionary spending you can reduce, even by small amounts. Every dollar saved adds up over time.
Do high-yield savings accounts really make a difference?
Yes, absolutely. High-yield savings accounts offer significantly higher interest rates compared to traditional savings accounts. This means your money grows faster over time, maximizing the power of compounding interest.
Where can I find reliable data on average savings balances?
Credible sources include government websites (like the Federal Reserve), reputable financial institutions, and established financial news websites. Always prioritize data from sources with transparent methodologies and .gov or well-known financial institution domains.
Should I be worried if my savings are below the average?
Not necessarily. The “average” is just a data point. Focus on your personal financial situation. Do you have a sufficient emergency fund? Are you actively saving? If you are consistently saving and working towards your goals, being below the average is less of a concern. However, it can be a signal to review your savings habits and identify potential areas for improvement.
Liz Knueven
Personal Finance Reporter
Kit Pulliam, banking reporter and co-author providing expertise on American savings accounts.
Kit Pulliam
Banking reporter
