Have you saved more or less than the typical U.S. adult?
- Americans have a fairly impressive average savings balance.
- But savings balances have dropped substantially since 2021.
Saving money is important for a number of reasons. First, you need money in your savings account in case an emergency strikes, such a major home repair or a layoff at work. You also need savings to meet different goals, like being able to retire comfortably or purchase a home.
You may be curious as to how your savings balance compares to that of the average American. And Northwestern Mutual has some answers. In its most recent Planning & Progress Study, it found that respondents had an average personal savings balance of $62,000 in 2022.
Now to be clear, the study doesn’t offer a detailed breakdown of that balance, so we can’t be sure if that represents total savings versus savings earmarked specifically for emergencies (though that balance does read high for an emergency fund alone based on other reports out there). But while $62,000 might seem like a respective level of personal savings, it’s also a much lower figure than the $73,000 respondents reported in 2021.
A big reason for that could boil down to inflation. Living costs have soared since mid-2021, so perhaps more people have had to dip into savings to compensate.
Another likely reason why savings balances are lower this year is that society has opened up a lot from a COVID-19 perspective. For many months now, there have been fewer restrictions across the country, and that may have led to an uptick in travel, resulting in more people tapping their savings to take vacations.
How to boost your savings
You may not be so thrilled with the state of your savings right now. Or, you might acknowledge that you have a decent level of cash reserves but still want to do better. If boosting your savings is a goal, you can try the following steps.
1. Get on a budget
Having your monthly expenses mapped out for you could help you make smart spending choices and identify bills that are relatively easy to cut back on. The result? More money for you to put into the bank.
2. Bank your windfalls
It’s tempting to spend extra money you come into during the year, whether it’s a gift, a bonus, or a tax refund. But if you push yourself to bank that money, you’ll get much closer to meeting whatever savings goals you establish.
3. Get a second job
Your paycheck may be fully maxed out these days given the way living costs have soared. In that case, your ticket to growing your savings could be to get yourself a side hustle. The beauty there is that you should be in a good position to save the bulk of your earnings (minus what you owe the IRS for taxes). And since there are so many side gigs available, you may have a fairly easy time finding a side hustle that fits into your schedule.
If your savings balance is much lower than that of the average American, don’t despair. Remember, there’s a lot of data missing from that number. It could be that you’re younger than most survey respondents and therefore haven’t had as much time to build savings. So rather than beat yourself up for what you perceive as a savings shortfall, take steps to boost your savings rate and beef up your bank account balance.
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