10 Signs You’re Doing Better Financially Than the Average American

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 ten metrics can help you figure out where you fit financially compared to the rest of the country.

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. Check out savings accounts paying high interest rates.

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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. Ready to invest? Check out these 8 top investing apps.

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A credit score in the 700s is another indicator that you are in better financial shape than you might think. According to Experian, the average credit score for Americans ages 18 to 25 is 679, and only slightly higher at 687 for those ages 26 to 41.

Knowing your credit score and history is the first step to improving it. Free services like Credit Sesame or Credit Karma can help you easily stay on top of your credit.

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.

It feels great to watch your savings account grow, but if you're depositing an amount you can't afford into your savings only to have to transfer it back a couple of weeks later, it can get discouraging.

If you have a well-planned budget, you'll be able to determine how much you can set aside for savings each month. There are a few exceptions for necessary purchases, but it's good to get in the habit of leaving your savings untouched as much as possible.

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. Check out these top 0% intro APR credit cards that can help you pay off high-interest debt faster.

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One of the easiest and best financial habits to form is to keep tabs on your finances. Many Americans are unaware that they are still paying for subscriptions that they don't use anymore or are overpaying for bills unnecessarily. There are a number of budgeting apps that make keeping track of your spending and saving easy. For example, Rocket Money can help you with the following:

• Manage your subscriptions
• Automatically save money
• Learn about your spending habits
• Track and understand your credit score
• Negotiate your bills
• Learn how to budget

You can see all your finances in one place and receive insights and alerts to help you achieve your goals, taking the stress out of budgeting.

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.

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According to a Bankrate survey, 1 in 5 tax filers aren’t sure what kind of refund to expect in 2023. While thinking about your taxes may not be the most exciting, tax-advantaged saving and investing can help you get ahead. 

You should stay organized throughout the year, keeping track of your income and deductions. Planning your budget around your contributions to a retirement account or health savings account if you have a high-deductible health plan can help you reduce the amount you’ll owe in taxes each year while helping you prepare for a healthy financial life and future.

According to a Consumer Finance report, almost 80 percent of consumers reported that they were living paycheck to paycheck. One in four consumers said they do not pay all of their bills on time, and one-fifth of adults expect to leave some regular monthly bills at least partially unpaid. If you're able to pay your bills on time each month, you're already doing better than most.

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 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.

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