How does your savings account compare to the average American?
FILE - A budget Lenovo laptop with a piggy bank and coins.
A check engine light, a pipe bursting, black mold – all of these incidents can prompt a need to dip into an emergency fund or savings account, but how many Americans are actually able to maintain one with prices and inflation rates still high?
The typical rule of thumb when it comes to how much you should have in your savings/emergency fund is between at least three to six months’ worth of expenses, according to Wells Fargo.
However, that amount may vary depending on your income, lifestyle, monthly costs, etc.
Take a look at how your fellow Americans are faring.
2024 was slightly better than 2023
Data collected by Bankrate, a financial services company, released its annual 2024 emergency savings report and found that despite the high cost of common goods such as groceries and gas, more Americans were able to save this year compared to last.
Fifty-five percent of Americans had more in their emergency savings than they did in credit card debt, according to Bankrate.
But that doesn’t mean most adults in the United States aren’t struggling to pay off credit card debt.
"All too many Americans continue to walk on thin ice, financially speaking, with fewer than half indicating they would pay an emergency expense of $1,000 or more from savings," Bankrate Senior Economic Analyst Mark Hamrick said. "Inflation has been a key culprit standing in the way of further progress on the savings front. Fortunately, rising interest rates have also provided more generous returns on savings."
Median savings amount in US
The Federal Reserve’s Survey of Consumer Finances (SCF) found that in 2022, the median bank account balance for all families in the U.S. was $8,000. That $8,000 includes transaction accounts such as savings, checking, money market, call accounts and prepaid debit card balances, according to Bankrate.
The SCF also broke down the median based on income, according to Bankrate.
Median bank account balance based on income
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How much should you put into savings?
Again, depending on your income and your lifestyle, how much you put into your savings can vary.
However, the most popular and simplest method is the 50/30/20 rule.
This means 50% of your pay should go toward necessities such as your mortgage or rent, groceries, utilities, insurance, gas, child care, etc.
The 30% goes towards wants such as dining out, vacations, gym memberships, movies, and hobbies.
And that final 20% goes into savings. This includes retirement, investments, and emergency funds.
This story was reported from Los Angeles.