Of the Americans who have savings accounts, the median savings account balance is $5,200. The average, or mean balance is $33,766.49. (Citation)
This means 2 things:
- High savings balance folks are pulling the average wayyy up by having wayyy more savings
- Most Americans have a few grand in the bank.
Think about that.
Regardless of what you’re pulling in, the lesson I’m pointing out here isn’t frugal spending, cutting out lattes and avocado toast.
The lesson is about the urgency and impact.
Most people don’t save a lot because retirement feels so far away. They also feel like they will start saving when they have more money coming in.
Of course, what usually happens ends up being very different from what actually happens.
If income increases, then their lifestyle inflated to consume that new income.
The strange thing is that even without putting a lot away, you could really make a big impact over time.
Remember that urgency is the reason most people take action, but you’re smarter than that.
1% improvements double every 70 days, not 100.
The key isn’t major windfalls or life events, those rarely, if ever, happen.
The key is small, daily, relentless action.
Excercise, saving for retirement, building your career, changing the world, whatever.
Its all the same method.
Try to take it all on at once and you will fail.
Adjust to the reality of slow, incremental progress and you will get to the end thinking that it was never that bad.
2 Minute Action:
Do you know how much of your income you’re saving?
A good starting rule would be, of your cash-in-hand, take-home income (after taxes):
- 50% goes to Needs (rent, food, most utilities)
- 30% goes to Wants (cable, Netflix, restaurants)
- 20% goes to Savings
It helped me get on the right track with my finances and get out of high interest credit card debt.
It’ll take you 2 minutes to plug in some numbers and figure out how you’re doing.
You can absolutely do this.