Whatever stage of life you’re in, one thing will always hold true: saving money is something you should do at any time of day. It’s time to change your perspective if you’ve been wondering, “How much should I have saved?” Consider, “How much could I save?” Continue reading to find out what you can save now and later on.
Saving money is crucial for financial security, regardless of your age. But how much should you have saved by the time you’re 23? The answer depends on several factors, including your income, expenses, and financial goals. However, understanding average savings by age can provide a helpful benchmark.
Average Savings by Age: A Snapshot
According to the Federal Reserve’s 2022 Survey of Consumer Finances, the average American has $62,410 in savings. However, this figure varies significantly by age group. Here’s a breakdown:
- Under 35: $20,540 (median: $5,400)
- 35-44: $41,540 (median: $7,500)
- 45-54: $73,030 (median: $15,000)
- 55-64: $117,750 (median: $30,000)
- 65 and over: $146,300 (median: $45,000)
How Much Should You Have Saved at 23?
While the average savings for individuals under 35 is $20,540, this doesn’t necessarily mean you should aim for that specific amount. Your individual circumstances should guide your savings goals.
Here are some factors to consider:
- Income: Your income level directly impacts your ability to save. If you earn a higher income, you may be able to save more.
- Expenses: Your expenses, including rent, groceries, transportation, and debt payments, influence how much you can set aside.
- Financial goals: Do you have specific financial goals, such as buying a home, starting a business, or retiring early? These goals will shape your savings strategy.
Tips for Saving More at 23
- Create a budget: Track your income and expenses to identify areas where you can cut back and save more.
- Automate savings: Set up automatic transfers from your checking account to your savings account each payday.
- Reduce unnecessary expenses: Look for ways to cut back on non-essential spending, such as dining out or entertainment.
- Increase your income: Consider ways to increase your income, such as taking on a side hustle or asking for a raise.
- Invest your savings: Once you have an emergency fund, consider investing your savings to grow your wealth over time.
Saving money at any age is essential for financial well-being. While average savings by age can provide a helpful benchmark, it’s crucial to tailor your savings goals to your individual circumstances. By creating a budget, automating savings, and making smart financial decisions, you can set yourself up for a secure financial future.
Frequently Asked Questions
Q: How much should I have saved by the time I’m 30?
A: The average savings for individuals aged 35-44 is $41,540. However, your individual circumstances should guide your savings goals.
Q: How much should I have saved by the time I’m 40?
A: The average savings for individuals aged 45-54 is $73,030. However, your individual circumstances should guide your savings goals.
Q: How much should I have saved for retirement by the time I’m 23?
A: It’s never too early to start saving for retirement. Aim to contribute as much as you can afford to your retirement account.
Q: What are some good ways to save money?
A: Creating a budget, automating savings, reducing unnecessary expenses, and increasing your income are all effective ways to save money.
Q: What are some good investments for young adults?
A: Consider investing in low-cost index funds, ETFs, or robo-advisors.
Compounded savings based on the age you started:
It’s not always possible to dedicate 5% of your pre-tax income to retirement by 2015. You might not be able to save that much of your income all at once because you are beginning a new job, paying off student loans, or having other financial responsibilities. The percentage you are comfortable with should be your starting point, and you should increase your savings rate 1% annually until you hit the 2015 mark. Don’t freak out if you’re currently repaying debts or loans. Aim to pay off debt and save for retirement at the same time. Put money away as much as you can while adhering to your loan repayment plan.
Emergency savings goals
Throughout your life, the appropriate amount for your emergency fund will probably change depending on how much you spend each month. As a general rule, try to budget for three to six months’ worth of expenses. Simply multiply the amount of money you spend on expenses each month by three or six months to get your target goal amount, which is how much you should have saved for emergencies. The table below illustrates what that would entail based on national averages.