Are you one of the Americans who’s in the dark?
If you want to accomplish big financial goals, saving money is essential. It’s also important to know you can cover unexpected expenses without having to borrow.
Unfortunately, many Americans have far too little saved. And surprising data from Northwestern Mutual shows one possible reason: a lot of people aren’t keeping track of their progress. In fact, a shocking 36% of Americans don’t even know how much they have saved.
And that’s a big problem for a number of reasons.
Here’s why you need to know how much you have saved
If you’re one of the many Americans who doesn’t know what they have in savings, there are two big issues:
- It’s impossible to know whether you’re on track with your savings goals if you don’t know how much you have.
- You may not be optimizing your savings if you aren’t sure how much money is in different types of accounts.
There are a number of savings goals that pretty much everyone should set for themselves. These include saving for retirement and building up an emergency fund with enough cash to cover three to six months of living expenses. You may also have other things you should be saving for. If you plan to buy a house, make big purchases, or go on an expensive vacation, you should be setting money aside well in advance. That way you can do these things and still avoid debt.
If you don’t know how much you have saved, you’ll have a much harder time accomplishing these goals. The amount you’ve already put aside determines how aggressive you need to be in saving for your later years or putting aside emergency money. If you have $0 in emergency savings, that obviously needs to be your top priority. Or perhaps you hope to buy a house within five years and currently have $5,000 saved. This will shape how much you need to budget each month to ensure you have a large enough down payment when the time comes.
If you keep tabs on your savings, you’ll be able to determine if you’re on track to accomplish your goals and, if not, what you need to do to get there. You can’t make these kinds of decisions if you have no idea how much you have in the bank.
You’ll also be able to allocate your money wisely if you know how much you have. You’ll want to make sure you have emergency savings in a high-yield savings account where it’s easily accessible. It also makes sense to keep money you need in the next two to five years in your savings account. But once you’ve got enough short-term savings, you might want to invest some of your funds so you can earn a better return. If you don’t know your total savings balance, it’ll be difficult to determine when you should shift to investing.
How to figure out the amount you have saved
The good news is, it’s not hard to find out how much you have saved. So if you’re among the 36% of Americans who don’t know this number, you don’t have to remain in the dark.
Simply sign in to each of your online bank accounts and brokerage accounts and tally up the numbers. And to make things easier for yourself in the future, you may want to link your accounts to an app such as Mint that pulls data from each account automatically. That way, you can always keep track of your total savings without having to manually check all of your accounts.
Keeping tabs on your savings lets you take more control over your money. And hopefully, you can make better choices about how much to save — and where to put your savings — in the future.