Comparing yourself to others isn’t always the best idea, but it can come in handy if you’re trying to gauge how well you’re doing financially.
For example, do you save enough money compared to others in your age group? How does your emergency fund match up against others who have put away money for a rainy day?
Keep reading: These five metrics can help you figure out where you fit financially compared to the rest of the country.
You have more than $4,500 in savings
More than half of Americans — 51% — have $5,000 or less stored in savings accounts, according to a Motley Fool survey. Additionally, 35% had $1,000 or less saved.
The median amount Americans have tucked away is $4,500. That means half of Americans have more than that amount, and half have less.
So, give yourself a pat on the back if you have at least that much saved. Then, get to work saving even more.
You have more than $30,000 in your 401(k)
According to Vanguard’s “How America Saves 2022” report, these are the median amounts Americans between the ages of 34 and 54 have saved in their defined-contribution plans:
- Ages 34-44: $36,117
- Ages 45-54: $61,530
So, if you’re in your mid-30s and have more than $36,000 in your 401(k), you’re doing better than most of your peers.
But again, this is simply a comparison against others your age. Just because you are saving more than they are doesn’t necessarily mean you are saving enough.
Many of us will have a long retirement. That means you should save a lot of money so you will have enough cash to see you through your golden years. Some experts have suggested saving twice your annual income by age 35.
So, if you only have $36,000 in retirement savings at age 35, you probably aren’t saving enough.
If you are unsure of how much you need to save, sit down with a financial advisor and make a plan to prepare financially for retirement.
Pro tip: It’s never too late to start saving for retirement. But if you begin at a young age — and you have a little luck on your side — you might even be in a position to retire early.
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You can cover an emergency of more than $2,000
The Motley Fool survey found that 47% of Americans have an emergency fund they can tap into if they need money suddenly. The median amount in such accounts is $2,000.
Other surveys have found that many people have far less saved for a rainy day — as little as a few hundred dollars.
So, if you think you can comfortably cover an expense of more than $2,000 the next time one pops up, you can feel pretty confident that your finances are more secure than those of many Americans.
But even if you have more saved than most, you might want to consider putting even more away. Many experts recommend having enough money in an emergency fund to cover at least three months’ worth of expenses.
If you aren’t quite at that level yet, don’t worry — but don’t stop saving either.
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If you want to kick high-interest credit card debt to the curb, this is one of the leading get-out-of-debt cards available. Transfer your high interest debt to this card with a 0% intro APR for up to 21 months from account opening on qualifying balance transfers. Your payments can go directly to paying down your balance without incurring a pile of additional charges. That could save you hundreds of dollars in interest!
It doesn't just stop with balance transfers though. Cardholders also get a generous intro APR of 0% for up to 21 months from account opening on purchases. After the intro period for purchases and balance transfers, then APR is 17.74% - 29.74% variable.
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You have less than $6,500 in credit card debt
The average American adult holds $6,569 in credit card debt, according to a LendingTree analysis. And the situation appears to be growing worse with time. If you have less than $6,500 in credit card debt, your debt load is better than most.
By the third quarter of this year, total credit card debt in the U.S. stood at $925 billion, a $38 billion jump from the first quarter, according to data from the Federal Reserve Bank of New York.
But it’s crucial to keep that debt as low as possible going forward. That’s especially true if you plan to retire soon, as your fixed income can make it harder to pay down credit card debt.
The longer you go without paying off your balance, the faster your credit card debt can spiral out of control. So, get to work paying down credit card debt as soon as possible.
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Your total net worth is at least $100,000
Net worth is more than just a financial metric used for the richest of the rich. Since your net worth is what remains when you subtract liabilities from assets, it can be a useful calculation for anyone who wants to understand where they stand financially.
To calculate your net worth, find the total cash value of any property, jewelry, cash, investments, insurance policies, and other assets. Then, subtract any debt, such as mortgage loans, student debt, and credit card obligations. What's left is your net worth.
According to the Federal Reserve’s 2019 Survey of Consumer Finances — the most recent survey — median net worth for Americans ages 35-44 stood at $91,300.
For Americans ages 45-54, that number was $168,600.
Net worth isn’t the only way to measure your financial success, so if your net worth isn’t over $100,000, don’t panic. Still, a net worth calculation can tell you which areas of your financial life you need to work on if you want to meet all your future financial goals.
They say comparison is the thief of joy, so if you don’t measure up to every single one of these metrics, take some deep breaths.
There's always time to set new financial goals and empower yourself to take control of your financial future.
So set your sights on new goals: Crush your credit card debt and start building a savings account.
And remember that you are doing this not out of any desire to keep up with the Joneses, but for your own quality of life and peace of mind.