We’re all different. We make different amounts of money… we spend differently… we save differently… we handle money differently. However, the one thing we all have in common is that at one time or another, we’ll have an unexpected situation arise for which we’ll need funds. Home repairs, auto repairs, unemployment, just to name a few.
If something like these were to happen to you, would you have enough liquidity to pay for the expense? The typical American household has $8,863 in savings at a bank or credit union (not including retirement funds or other investments). Though savings vary widely by household type and age, singles and younger adults tend to have less than the $8,863. Is that a sign of the times or a lack of financial education? Only those individuals can answer that question.
The Breakdown of Savings
As mentioned, age and household type have a huge impact on how much individuals are holding in savings. Here’s how the scenarios break down:
Age 34 and Younger:
Single people with children: $1,350
Single people without children: $2,729
Couples with children: $3,682
Couples without children: $4,727
Ages 35 to 44:
Single people with children: $2,422
Single people without children: $3,693
Couples with children: $10,399
Couples without children: $5,306
Ages 45 to 54:
Single people with children: $4,163
Single people without children: $5,763
Couples with children: $15,589
Couples without children: $11,483
Ages 55 to 64:
Single people with children: $6,652
Single people without children: $7,292
Couples with children: $13,164
Couples without children: $15,297
Age 75 and older:
Single people with children: $6,909
Single people without children: $9,981
Couples with children: $8,967
Couples without children: $16,025
So which category do you fall into? Are you above average or below average? Is it time to start increasing your savings?
Many advisers recommend putting away 20% of your income and diversify its placement across retirement plans, CDs, money market accounts, savings accounts and other financial instruments that can help grow your money. Of course, savings accounts are important if you need to be more liquid for some of the emergency situations mentioned earlier.
In the end, how much you save will depend on how much you’re spending. Therefore, the first step to creating a savings plan is to create a budget so you can find a way to take that 20% and begin stocking it away for the future.
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