In 2023, Americans will have an average personal savings balance of $65,100, according to Northwestern Mutual’s Planning and Development Study. While this average indicates a healthy savings culture, it is important to note that 11% of Americans have savings of $4,999 or less, reflecting the wide variation in financial situations across the country.
The study reveals interesting patterns in financial planning and saving. For example, those who identify as disciplined financial planners tend to retire two years earlier (at age 63) compared to informal or non-planners who retire at 67.
In the US, 50% of American adults consider themselves disciplined in their financial planning, with 20% classifying themselves as very disciplined and 30% as disciplined. Conversely, the other half fall into the undisciplined category, with 36% admitting to informal planning and 15% never engaging in financial planning.
On a positive note, 70% of Americans have a clear understanding of their current spending vs. saving for the future. This explanation is significantly increased by 83% of those who engage in the services of a financial advisor. An overwhelming 86% of individuals who see themselves as disciplined or very disciplined in their financial planning also report having this level of financial clarity.
Financial anxiety appears to follow a life trajectory, peaking among Millennials and lowest for Boomers+. More than a third of Americans are at or near their highest level of debt ever.
Because of these findings, it is important to understand and implement strategies for managing money and maximizing savings. Here are some tips:
Set clear financial goals: Start with specific, achievable goals. Whether it’s saving for a down payment on a house, building an emergency fund or planning for retirement, clear goals can guide your saving and spending habits.
Create a budget: Track your income and expenses. Identify areas where you can cut back and redirect money into savings.
Emergency fund: Aim to build an emergency fund that covers three to six months of living expenses. This fund can be a financial savior in unexpected situations.
High yield savings accounts: Consider putting your savings into a high-yield savings account. These accounts typically offer higher interest rates than regular savings accounts, allowing your money to grow faster.
Automate storage: Set up automatic transfers to your savings account. This ensures that you can always save a portion of your income without having to think about it.
Reduce debt: Pay off high-interest debt first, such as credit card balances. This will not only reduce the amount you pay in interest but also improve your credit score and financial health.
Invest wisely: If you can, consider investing in stocks, bonds or mutual funds. Remember to diversify your investments to minimize risk.
Seek professional advice: A financial advisor can provide personalized advice based on your financial situation and goals.
Stay informed: Keep up with financial news and trends. Understanding the economic environment can help you make better financial decisions.
Review and adjust: Review your financial plan regularly and adjust as needed. Your financial needs and goals change over time, so your plan should evolve as well.
Remember, personal finance is deeply individual. What works for one person may not be the best strategy for another. It’s about finding the right balance that works for your financial situation and goals.
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This article The Average American Has $65,100 In Their Savings Account – How Do You Compare? originally appeared on Benzinga.com
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