Many of us like to think we're average.
Indeed, the celebration of the Middle Class is often about being an “average” American.
And, while it's often not so bad to be average, the reality is that maybe your finances are better off if you aren't average.
The average American is, unfortunately, not exactly in best of financial circumstances:
Average Credit Card Debt
The Federal Reserve regularly puts out information about household indebtedness, including credit card debt. The average household credit card debt was $7,149. That's a pretty hefty chunk of change — especially when you consider the high rate of interest that Americans are paying on their debt.
The average indebted household debt (this doesn't include the mortgage) was $15,325 at that time. So credit card debt isn't even half of the total of indebtedness. Look at your debt situation. Do you really want the same average debt as other Americans?
Average Savings Rate
Another consideration is the average savings rate in the United States. According to Ycharts, the savings rate at the end of September 2012 was 3.30%. This average savings rate just isn't sufficient for most households. What happens if you run into an emergency? Even though the long term average is 6.92%, as reported by Ycharts, the reality is that the average American just doesn't set aside enough money.
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Rather than being average, look for ways that you can increase the amount of money you are setting aside. You want to be able to meet your short-term and long-term savings goals, and you won't do that when you are just “average” when it comes to your savings plan.
Average Retirement Account
One of the most important things you can be doing right now is preparing for retirement. The average American, though, isn't truly ready for retirement — much less an early retirement. According to the Social Security Bulletin, only about 1/3 of people aged 65 and older has an IRA or a 401(k). And, even though Fidelity reports that the average size of combined retirement accounts for those between 65 and 69 is $359,999, that's still not a huge amount.
Even scarier is the report from LIMRA that indicates half of Americans aren't saving for retirement. At all. That means that the average American isn't even saving for retirement. Those in the younger age bracket of 18 to 34 aren't really saving, either: 56% are not saving at all. Only about 1/3 of Americans starts putting money aside for retirement in their 20s, according to a report from Bankrate.
That's pretty sobering stuff. Being “average” when it comes to your retirement savings could easily mean that you don't end up retiring when you want — and it could mean that your “Golden Years” are far from golden.
What To Do About It
Recognize that you don't want to be an “average” American — at least when it comes to money. The average American spends too much using debt, and doesn't set aside enough money for the future. You need to take charge. Make a plan to pay down debt, and set aside more money for your savings (including your emergency fund) as well as for your retirement.
Are you “average” when it comes to finances?