How Much Do Most 22 Year Olds Have Saved?
Let‘s start with the bottom line: research shows that approximately 67% of young adults aged 18-24 have less than $1,000 in savings. About 46% have absolutely nothing saved in the bank. I know that may be discouraging to hear as a 22 year old. But don‘t worry – there are some simple, practical steps you can start taking now to build up your savings.
This guide will walk you through why savings are generally low at your age, how much you should aim to have put away, and effective strategies to start saving for the future. With some diligence and discipline over time, you can make meaningful progress and set yourself up for long-term financial security.
Why Do 22 Year Olds Have Low Savings?
There are a few core reasons why young adults tend to have relatively little money saved up:
Early Career Stage
Many 22 year olds are just starting out in entry-level roles in their careers. According to the U.S. Bureau of Labor Statistics, the median weekly earnings for workers ages 20 to 24 is $592, or around $30,800 annually. With limited income, savings contributions are restricted.
Student Loan Debt
Outstanding student loan debt makes it difficult for young adults to accumulate savings. Over 43 million Americans have federal student loan debt, with an average balance of $39,351 per borrower. Loan payments eat up income that could otherwise be saved.
Lifestyle Inflation Creep
As income rises in the early career stage, expenses have a tendency to inflate as well. Upgrading your apartment, buying a car, eating out more often – "lifestyle inflation" leaves less disponible income to save.
Lack of Saving Habit
Many 22 year olds simply have not made saving money a consistent habit yet. Only time and experience will instill the financial discipline required to consistently set aside income rather than spend it.
Recommended Savings Goals for 22 Year Olds
While your actual savings will depend heavily on your individual circumstances, here are some reasonable benchmarks to aim for:
Emergency Fund Savings
Your first savings priority should be to accumulate enough in safe assets to cover 3-6 months of living expenses. This "rainy day fund" serves as protection against income disruption from job loss, medical issues, or other unexpected situations:
| Monthly expenses | Emergency fund target |
|---|---|
| $1,500 | $9,000 ($1,500 x 6 months) |
| $2,500 | $15,000 ($2,500 x 6 months) |
| $3,500 | $21,000 ($3,500 x 6 months) |
Retirement Savings
Contributing enough to your 401(k) or IRA to get any matching funds from your employer is wise. This is essentially "free money" that you should be sure to take advantage of early in your career:
| Annual income | 401(k) match | Amount to contribute |
|---|---|---|
| $40,000 | 50% of 6% contributed | $2,400 annually |
| $60,000 | 100% of 4% contributed | $2,400 annually |
| $80,000 | 25% of 8% contributed | $2,000 annually |
Additional Savings
Beyond your emergency and retirement savings, you should aim to save at least 10-15% of your income annually into investment accounts. This will provide funds to use for future goals like buying a home, traveling, pursuing hobbies, or further education.
Strategies To Ramp Up Your Savings
Here are some highly effective ways to start saving more money now as a 22 year old:
Create a Budget
Take time to carefully account for your monthly income and expenses. Look for discretionary spending areas you can trim like dining out, entertainment, or shopping. Budgeting apps like Mint can automate this process and keep your spending on track.
Pay Yourself First
Set up automatic transfers from your checking account to savings accounts each pay period. By saving first before spending, you make it a priority. Even small amounts like $25 or $50 transfers add up.
Save Windfalls
Use any extra unexpected income you receive to grow your savings instantly. Bonuses, tax refunds, gifted cash – devote all of it to your emergency fund or investment accounts.
Earn Side Income
Generate additional income through part-time gigs like ride-sharing, tutoring, freelance work or selling items online. Allocate all your side earnings directly to savings.
Invest Savings Strategically
Make sure you‘re investing savings intelligently, not just keeping it in cash. Stocks, bonds, mutual funds and ETFs allow your money to grow faster long-term.
Build Saving Momentum
As your account balances grow, it will motivate you to save even more. Watching compound growth accelerate your savings over time is extremely rewarding.
The Benefits of Starting to Save Early
The real power of beginning to save diligently at 22 is time and compound returns. Consider this example:
- Anna starts saving $300 per month at age 22, earning a 6% average annual return on her investments.
- By age 65, she will have accumulated $531,815.
However, if Anna waits until 35 to start saving the same monthly amount, she would have only about $133,097 by age 65.
By starting those savings contributions 13 years earlier, Anna ended up with nearly $400,000 more by retirement age!
This demonstrates how consistent monthly saving in your early career, when compounded over decades, results in far greater wealth compared to waiting. Small amounts can grow exponentially.
So be patient and persistent. Make saving a priority now, and maintain discipline over time. You have an immense opportunity to build financial security and independence. Take advantage of it!