Like many people, this year has been a struggle for our family. Unfortunately, it has brought many more financial lows than highs in our household. With reduced hours, lost contracts, and increased expenses due to inflation, things have been tight.
Therefore, we are constantly looking for ways to eliminate unnecessary spending and generate more income. Even with these adjustments, I still feel like I’m falling behind my savings goals. Despite these financial difficulties, it may not be as bad as you believe. Based on these five signs, you might discover that you’re better off than the average American.
1. Your Credit Score Is Above 690
Like it or not, your credit score will have a significant impact on your financial future. Since it is one of the primary indicators lenders use to assess your ability to repay loans, it will affect the terms and rates when you apply for a mortgage, car loan, credit card, insurance, and other credit products.
According to recent data from Experian, the average score for Americans between the ages of 18-25 is 679. Meanwhile, it’s only slightly higher at 687 for Americans 26-41. Although 700 is usually the threshold for a “good” score, anything above 690 means that you’re probably better off financially than the average American within these age groups.
2. You Have Enough to Cover an Emergency Expense Above $2,000
Financial advisors strongly suggest that you maintain an emergency fund with enough money to cover at least three months’ worth of expenses. Despite this standard, only 47% of Americans follow this advice. Even then, the average amount for these accounts is only about $2,000.
The harsh truth is that many people don’t even have this safety net in place. If they had to deal with a large, unexpected expense, it could mean financial ruin. However, if you have enough cash on hand to cover an emergency expense of $2,000 or more, you are more financially secure than many of your fellow Americans.
3. You Carry Less Than $7,000 in Credit Card Debt
A recent study from LendingTree revealed that the average American has $6,993 of credit card debt. And if spending patterns persist, the situation is going to get even worse.
This year alone, the national credit card debt skyrocketed by $38 billion from the first to the third quarter. It has now reached over $1 trillion. But if you have a balance of less than $7,000 on your credit cards, your situation may not be as dire as it seems.
4. There Is More Than $4,500 in Your Savings Account
Saving money is difficult under the current economic conditions so much so that 35% of Americans have less than $1,000 in accessible savings right now.
Furthermore, more than half reported less than $5,000 total in their savings account. So, if you have more than this stashed away, you should feel proud and a little better about your current situation.
5. You Have Over $30K in Your Retirement Accounts
Another indication that you’re better off than the average American is the balance of your retirement accounts. Based on the findings in Vanguard’s report “How America Saves 2023”, most adults are not saving enough for retirement.
Those between the ages of 25-34 had a median amount of $11,357 in defined-contribution plans. Meanwhile, those 35-44 had a median account balance of $28,318. Therefore, if you are in your 30s and have more than $30k in your retirement accounts, you’re in a better position than most of your peers.
However, these figures paint a grim picture. If you are below these thresholds, it may be time to review your retirement plan and find ways to increase your contributions.
Food for Thought
Although these facts and figures provide an interesting comparison, they shouldn’t be the only measuring stick for your financial situation. Other factors such as your income, investing strategy, financial literacy, lifestyle choices, and spending plan will also have a major impact on your long-term financial health.
These statistics are simply a way to help you gauge your current circumstances. Looking at the raw data has put my mind at ease about some of our issues and also prioritize what’s most important for our long-term goals.
However, if you feel you are falling behind or have developed poor financial habits, it may be time to consider that these numbers may reflect those choices. Reassessing your situation and discussing your long-term plans with your financial advisor could help you get back on course and get where you want to be.
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