Assessing your financial progress by benchmarking against others can provide valuable insights, despite the caveat of not fixating on comparisons. It’s a helpful way to gauge your financial standing and make informed decisions. Here are ten criteria to help you determine where you stand financially relative to the nation as a whole.
- Your Savings Exceed $4,500
A significant number of Americans, precisely 51%, have less than $5,000 saved in their accounts, according to a survey by Motley Fool. An additional 35% possess only $1,000 or less. The median savings amount is $4,500, signifying that half the population has more, while the other half has less. Should you have at least this sum saved, it’s a commendable achievement. However, strive to enhance this figure further by exploring savings accounts offering higher interest rates. - Your 401(k) Exceeds $30,000
Vanguard’s “How America Saves 2022” report reveals that median savings for those aged 34 to 54 in defined-contribution plans are:
– Ages 34-44: $36,117
– Ages 45-54: $61,530
Surpassing $36,000 in your 401(k) while in your mid-30s sets you ahead of the majority. Yet, remember this is solely a peer comparison and not indicative of whether your savings are adequate. - Credit Score Above 680
A credit score in the 700s is a positive indicator of your financial health. The average credit score is 679 for ages 18 to 25 and slightly higher at 687 for ages 26 to 41, as per Experian. Understanding your credit score is vital for improvement. Utilize services such as Credit Sesame or Credit Karma to stay informed. - Emergency Fund Covers More Than $2,000
Approximately 47% of Americans possess an emergency fund, with a median value of $2,000, according to the Motley Fool survey. Many individuals have less saved, sometimes just a few hundred dollars. If you’re confident about covering expenses beyond $2,000, your financial stability is likely stronger compared to others. - Savings Remain Untouched Monthly
While it’s satisfying to witness your savings grow, dipping into savings and replenishing them shortly after can be disheartening. A well-crafted budget aids in determining your monthly savings capacity. Although exceptions exist for necessary expenses, the habit of preserving your savings should be cultivated. - Credit Card Debt Under $6,500
A LendingTree analysis reveals the average credit card debt for the average American adult is $6,569, with indications of an escalating trend. Should your credit card debt fall below $6,500, you’re better positioned in comparison. Keeping this debt low is crucial, particularly when nearing retirement, as a fixed income might challenge debt repayment. - Active Financial Monitoring
A fundamental financial habit is to track your finances. Many people unknowingly pay for subscriptions they no longer use or overspend on bills. Budgeting apps such as Rocket Money simplify tracking expenses and savings, offering a comprehensive view of your financial situation. - Net Worth Exceeds $100,000
Net worth, the balance of assets minus liabilities, isn’t exclusive to the wealthy. Calculating your net worth involves assessing assets like property, investments, and cash while subtracting debts. The Federal Reserve’s 2019 Survey of Consumer Finances cites median net worth as $91,300 for ages 35-44 and $168,600 for ages 45-54. - Proactive Tax Planning
A Bankrate survey reveals that a fifth of tax filers are uncertain about their refund expectations for 2023. While taxes may not enthuse, tax-advantaged strategies aid financial progress. Organization throughout the year, coupled with focused contributions to retirement or health savings accounts, reduces tax liability and fosters financial preparedness. - Consistent Timely Bill Payments
Roughly 80% of consumers admit to living paycheck to paycheck, with a significant portion struggling to pay bills on time, per a Consumer Finance report. Paying bills punctually is a distinct accomplishment, setting you ahead of the majority facing financial challenges.
In Conclusion:
Remember, while these benchmarks offer insights, they shouldn’t overshadow your personal journey. Striving to set new financial goals aligned with your aspirations is paramount. Focus on reducing debt and bolstering savings, driven by your desire for a secure quality of life and peace of mind, rather than keeping up with external comparisons.