10 Ways to Determine if Your Finances Are Better Than Average

Have you ever wondered how your finances compare to other Americans?
Updated May 1, 2024
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You're not alone if you’ve ever wondered how your finances compare to others. It’s human nature to wonder how everyone is doing. In some cases, it can be helpful to know.

Maybe you’ve saved much more than you realized, or maybe you’re further behind than you hoped and are still looking for ways to make extra money.

Even though it's impossible to know exactly how other people save and spend, these are good signs that you’re saving more than the average American.

You’ve saved at least one month of expenses

Vitalii Vodolazskyi/Adobe notepad with monthly budget calculations and money

Emergency funds are all the rage with money gurus, but there’s a reason everyone seems to love them.

Emergencies happen, and 20% of adults report that they experienced a medical emergency in the last year costing between $1,000 and $1,999.

If you have at least one month of expenses saved, you’re on your way to financial peace of mind. With a month's expenses, you could likely cover an unexpected medical treatment or job loss. Unfortunately, many Americans can’t.

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You can cover an $800 emergency expense today

Vitalii Vodolazskyi/Adobe glass jar filled with dollars

You might have heard that most Americans can’t cover an unexpected expense of $400, but that’s not actually the case.

According to the Federal Reserve, 68% of Americans can cover an unexpected expense using cash or its equivalent. If you want to feel more secure, aim for double that amount and save $800 instead.

Ready to up your savings game? Aim to keep three to six months of expenses in a separate emergency fund. After all, nothing feels better than financial security.

You contribute to a 401(k)

emiliezhang/Adobe 401k

According to the U.S. Bureau of Labor Statistics, 68% of Americans have access to a 401(k). However, of that number, only 51% of employees contribute to their accounts.

If you’re part of the 51% who save money towards retirement each month, you’re saving more in 401(k) than nearly half the population. That’s something to celebrate.

Consider increasing your monthly contribution if you’re ready to save more toward retirement. Or open a traditional or Roth IRA as another retirement savings vehicle.

Do you dream of retiring early? Take this quiz to see if it's possible.

You pay yourself first

fizkes/Adobe focused millennial woman in eyewear writes out information from invoices

When you pay yourself first, you set aside savings at the beginning of the month instead of the end. The reason to set aside money first is to ensure that you save it.

If your bank account balance is low by the end of the month, it’s more tempting to spend money instead of saving it. If you already save money when you first get paid, you’re doing a great job. Your future self will thank you.

You budget every month

Prostock-studio/Adobe lady with cellphone calculating her monthly spendings

Budgets often have a terrible reputation, but they’re simply a plan for your money. If you have a budget and stick to it, you’re in better financial shape than many Americans.

When you have a plan, you can meet your current needs and save for the future. Budgets don’t need to be complicated, and many options exist. Find one that works for you and stick to it.

You’ve increased your savings rate

lovelyday12/Adobe putting pennies in jar while writing on notepad on table

If you regularly increase the money you save each month, you’re probably saving more than most people.

It’s easy to fall into a routine and keep your savings rate the same even as your income increases. But it’s important to stay strong with your savings goals and continue to increase the amount you set aside.

If you don’t, you might have higher living expenses and lower saving balances — not the ideal combination.

You save in different accounts

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There are tons of different accounts where you can store your savings. Some are high-yield savings accounts, while others are investment accounts like 529 plans.

Regardless of the type, all savings accounts have something in common: they help you save. If you have more than one type of account where you save, you’re way ahead of other savers.

Your net worth is positive

Sutthiphong/Adobe interest rate and dividend concept

Net worth is your assets minus your liabilities. There are many reasons why someone might have a negative net worth.

In fact, student loan borrowers have an average of $27,800 in undergraduate federal student loans. Student loans alone could create a negative net worth.

So if you have a positive net worth, you’re probably not doing too badly. Even if there’s still room for improvement, it’s important to celebrate your financial wins.

You’re intentional about what you purchase

silverkblack/Adobe young woman chatting on mobile phone and shopping for clothes

It’s shockingly easy to fall into a spending habit. Maybe you’ve had a long day at work and treated yourself to takeout on the way home.

There are countless reasons for mindless spending, but the impact is always the same — less money saved. If you’re intentional about your purchases, your bank probably looks better than most.

You feel a sense of financial peace

fizkes/Adobe woman manages household budget

Financial peace looks and feels different for everyone. But if you feel calm and secure about your finances, you’re leaps and bounds ahead of the average American.

Many financial factors cause stress, so if you feel a sense of peace about your money, then you’re probably doing something right.

Bottom line

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It’s tempting to compare yourself to other people as a way to gauge your progress. But your life and finances are unique.

Instead of focusing on what other people do with their money, check in with your finances. If you like what you see, keep going.

Set goals and start making smart money moves today if you think there’s room for improvement. It’s never too late to change your financial reality.

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