Latest news with #emergency savings
Yahoo
05-08-2025
- Business
- Yahoo
You vs. America: See How You Compare in 5 Money Categories
Everyone's financial situation is different and depends on various factors. At times, it can feel like you've fallen behind and are much worse off than you actually are, so it's always good to see how you stack up against the average American. Find Out: Read Next: Here are five financial categories, along with where most people in the U.S. typically fall within them. Salary Median monthly income: $5,174 Median yearly income: $62,088 Numerous factors can affect your salary, including the type of job you have, the state it's in, the amount of experience you have and your level of education. Explore More: Retirement Savings Gen Z: $13,500 average 401(k) balance and $6,672 average individual retirement account balance, equaling $20,172 Millennials: $67,300 average 401(k) balance and $25,109 average IRA balance, equaling $92,409 Gen X: $192,300 average 401(k) balance and $103,952 average IRA balance, equaling $296,252 Baby boomers: $249,300 average 401(k) balance and $257,002 average IRA balance, equaling $506,302 Saving for retirement early allows your money to compound over time. Because of this, Americans' retirement savings can be drastically different, depending on which stage of life they're in. Whether you're in line with your generation's average or not, it's important to regularly put money away in order to maximize the amount of compound interest you'll receive over time. Emergency Savings Gen Z: $200 median emergency savings Millennials: $500 Gen X: $868 Boomers: $1,000 Most finance experts will advise you to maintain an emergency fund that would cover at least three to six months of your normal expenses. This allows you to avoid going into debt when an unfortunate life event takes place, such as a medical emergency, vehicle breakdown or job loss. However, today, 42% of U.S. citizens don't have any money saved up for an emergency, which means having any savings at all can put you ahead of most. The median amount that Americans have saved for an emergency is $600, well below the suggested amount. And none of the amounts by generation would cover you for three to six months, so even if you're ahead of the curve, it's best to keep saving. Credit Card Debt Average: $6,329 Credit card balances across the nation have been on the rise. In the second quarter of 2021, TransUnion reported that the average borrower had $4,828 in debt. Just three years later, in the second quarter of 2024, the average borrower had a balance of $6,329. Even if your credit card balance is below the U.S. average, it's a good idea to try to get it to zero. With high interest rates, even small credit card balances can have an extremely negative effect on your financial health. Monthly Groceries Average monthly spending: $315-$1,690 (varies depending on family size and budget type) Groceries continue to get more expensive, causing many to wonder how much spending is too much. At the end of 2024, a report found that adults who are between 19 and 50 in a four-person household spend $350 per person per month on groceries. Of course, this depends on your budget and diet. Men on a low-cost budget spend $360, those on a moderate budget spend $445 and those on a liberal budget spend $525 each month. Meanwhile, women spend $315 per month on a low-cost budget, $385 on a moderate budget and $490 on a liberal budget. For those with families, the costs are more in the thousands per month. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard 7 Luxury SUVs That Will Become Affordable in 2025 10 Genius Things Warren Buffett Says To Do With Your Money This article originally appeared on You vs. America: See How You Compare in 5 Money Categories
Yahoo
10-07-2025
- Business
- Yahoo
This is the minimum amount of savings you need to improve your financial well-being
When you don't have a financial safety net in place, an unexpected medical bill, car repair, or job loss can take a toll on your mental health and throw your budget for a loop. That's why experts recommend putting aside some money in an emergency savings fund. And according to a new survey by Vanguard, even a modest emergency fund can dramatically lower stress and elevate your financial health. So what's the magic number for improving financial well-being? And what can you do to achieve it? Vanguard researchers surveyed more than 12,400 Vanguard investors to understand the impact of emergency savings on financial well-being. They found that respondents who had at least $2,000 saved showed a 21% increase in financial well-being, while those with three to six months' worth of expenses saved had another 13% increase, even after accounting for income, debt type, and financial assets. 'People with emergency savings have a higher level of financial well-being, spend less time thinking about and dealing with their finances, and are less distracted at work,' said Paulo Costa, Vanguard's senior behavioral economist, in a statement. According to the research, investors without emergency savings reported higher levels of financial stress. On average, they spent 7.3 hours per week thinking about and dealing with their finances, compared with just 3.7 hours for those with at least $2,000 in emergency savings. Although $2,000 isn't a particularly large sum, many Americans have even less than that in their savings accounts — or nothing at all. According to our 2025 State of Savings Report, one-third (33%) of Americans couldn't cover bills for even one month if they lost their income. Meanwhile, only 26% said they had enough savings to cover one to three months of expenses. Read more: How much money should I have in an emergency savings account? If you have competing financial obligations like housing, debt payments, school tuition, etc., saving for emergencies may not be a priority. But that's the thing about emergencies: You can't predict when one will happen, but you can be certain it will happen at some point. When that day arrives, you'll be better prepared to cover the cost, avoid racking up debt, and protect your mental health with an emergency fund in place. Whether your goal is $2,000 or $20,000, it's never too late to get started. Here are a few best practices for building and maintaining an emergency fund: Experts typically recommend saving three to six months of essential expenses in an emergency fund, but the right amount depends on your personal situation. For example, if you have an unsteady income, you may want to aim for nine to 12 months' worth of expenses. Also, keep in mind that the amount of money you're able to comfortably save each month may fluctuate depending on how your income and financial obligations change over time. It's important to be flexible when it comes to your savings strategy and adjust it as your financial situation evolves. Once you've built a nice financial cushion, you may be tempted to dip into it. But this defeats the purpose of an emergency fund. Be honest with yourself about what constitutes a financial emergency and when it's appropriate to use that money. If you use your fund for an unexpected expense, make a plan to rebuild it. For example, you might decide to set aside a portion of your next few paychecks or temporarily cut back on discretionary spending to increase your savings contributions. It's important to have a clear separation between the money you use for everyday transactions and your savings. That means you should keep your emergency savings (and any other type of savings) out of your checking account. That said, your emergency funds should be easily accessible in a pinch — and ideally, earning interest while sitting in the bank. That's why a high-yield savings account is a great place to keep emergency savings; your money stays safe and grows over time, but can be withdrawn whenever you need it. Read more: The 4 best (and worst) places to keep your emergency fund
