The Average American Has This Much in Savings. How Do You Compare?

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KEY POINTS

  • There are different estimates out there as to what Americans have saved.
  • It's a good idea to focus more on your personal needs and goals than on what the typical person has socked away.

Are your savings on par with the typical American's?

If you're curious as to how well Americans are doing on the savings front, you're probably in good company. Social media and the constant oversharing of information has made many of us increasingly crave information -- information that might otherwise be considered private. But if you want to know how your savings stack up, financial guru Graham Stephan may have an answer.

In a recent Tweet, Stephan said the average American household has $10,000 in savings. Now to be fair, this number should be taken with a grain of salt. First of all, it's only one estimate, and it's also an estimate at the household level, not the individual level. But still, it's a piece of data for you to consider.

But how much stock should you place in that $10,000 average? And is that the right amount of savings for you to be aiming for?

Why the average American's savings balance shouldn't actually concern you

There's nothing wrong with wanting to know what the typical saver has socked away in the bank. But should you base your personal savings goals on what the average American has? Not at all.

For one thing, your needs and goals might be different. And you might also earn more or less money than the typical American, which is apt to impact your savings ability. So rather than get caught up in an average figure, instead, think about your needs.

How much cash should you set aside for emergencies?

As a general convention, it's a good idea to have an emergency fund with enough money to cover three to six months of essential bills. (Some experts will tell you to aim higher, especially in the wake of the pandemic and the financial crisis it spurred in 2020.)

Now if you happen to spend $2,500 a month, you may decide that having $10,000 set aside for emergencies is a good goal, since that's four months' worth of living expenses. But if you spend $5,000 a month on essentials, then a $10,000 emergency fund actually falls short of that three-month minimum.

What are your short-term financial goals?

Maybe you're all set for emergencies, but you want to save money to buy a home or replace a car. The amount of money you have in savings should reflect your personal objectives and choices.

Let's say you own a home already and have a perfectly functional paid-off car. In that case, you might have less money in savings than someone who's trying to build up enough cash to buy those things -- and that's okay.

Focus on yourself

You may want the peace of mind that comes with knowing your savings are on par with those of the typical U.S. household. But rather than fixate on that, think about your own needs and goals instead.

The typical household may, according to one estimate, have $10,000 in savings. But you might have $7,000 in savings and still be in a better place financially. So while it's okay to be curious about Americans' savings habits, don't get too caught up in the statistics you see -- especially since they can easily vary based on your source.

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