3 Surprising Stats About the Average American's Savings

According to all indicators, inflation is cooling, but you sure can't tell by the state of the average American's savings account. A recent survey by The Motley Fool Ascent found that the typical American household has $1,200 in their savings account. While that's enough to cover minor emergencies, it won't be enough to get someone through if they're hit with a large medical bill or suddenly laid off from their job.

We don't share this information to make anyone feel bad or to cause worry. We do so as a reminder that we can all stand to focus on how much we have in our emergency funds. Here, we'll share some of the more surprising statistics uncovered in our survey. We'll also touch on a few tips that may make putting a little money away each month easier.

1. For the majority, it's $5,000 or less

Of those who have money in savings, the largest percentage (22%) report having $5,000 or less. If that describes you, don't be discouraged because you're certainly on the right track. Given the state of the economy since the onset of the pandemic in 2020, saving money is an accomplishment.

Tip: If you're looking for a way to earn a high interest rate on your savings account while ensuring it's available to you in an emergency, it's tough to beat today's rates on high-yield savings accounts. It's the best of both worlds -- accessibility and a high APY.

2. 29% have a separate emergency savings account

The survey found that 29% of respondents have set up a separate account to hold their emergency fund. While there's no rule saying emergency savings must be separate from "regular" savings, there are a few associated benefits. For example:

• A separate savings account makes it easier to remember to keep your hands off money you may need in an emergency.
• A separate emergency savings account means you can move money from your regular savings account to a higher-interest vehicle like a certificate of deposit (CD) and still have emergency funds readily available if and when you need them.

Tip: If you take a look at how much interest CDs are earning today, you'll see how much money you can earn absolutely risk-free (assuming your bank has FDIC insurance).

3. 54% of us say we have enough put away to cover three months' worth of bills

The general rule of thumb regarding emergency accounts is that we should have enough money to pay three to six months' worth of bills. That doesn't mean you need to be able to cover three to six months' worth of income. You only need enough to pay bills during that time. Let's say your company furloughs you for a few months. If your basic bills run $3,000 a month, the goal is to have at least $9,000 tucked away. It may sound impossible, but it's not. In addition to adopting creative ways to save money, you can simplify how money gets to your savings account.

Tip: It sounds ridiculously easy, but automating deposits to savings is one of the best ways to build that account. For example, if you look at your budget and determine you can afford to divert $15 a week from checking to savings, ask your bank or credit union to make the automated transfer for you. Nearly every financial institution offers this service, and it's easy to set up.

Saving $15 a week may not seem like much, but it can grow impressively fast. By automatically having $15 deposited into your savings account each week, you'll have $2,715 available after one year. That's a great place to start. Once you're accustomed to $15 a week, you may find that you can raise it to $20. If you can't immediately save enough to cover three months' worth of bills, that's OK! The point is to do what you can.

There's an adage, "How do you eat an elephant? One bite at a time." That saying reminds us that anything that seems overwhelming or impossible can be accomplished. You just have to take it one small step at a time.