Financial Snapshot: How Does Your Savings Score?

I have reviewed plenty of stats around savings rates, but with the last year being so unpredictable, the latest report by the Federal Reserve Bank of St. Louis reported a savings rate of 20.5%. It has been a roller coaster for savings rates, but it\’s been significantly higher than other times in history. 

Latest report by the Federal Reserve Bank of St. Louis

Also, this savings rate may be much more attainable, if not already attained, as many people are saving much more than usual. 

However, it can be challenging to know whether you\’re saving enough, and for many people, they don\’t necessarily know how much they should be saving or if they need to be saving at all. So I wanted to go through each of the columns related to savings today to show you whether you have enough saved or not. Of course, this will all depend on the life cycle that you\’re in, whether you have a family, whether you are married, whether there\’s dual-income and other economic indicators. 

There\’s a lot more to figuring out your savings, but this will give you something to go off of, think about, and work towards developing.

Now, let\’s see what it looks like to function in each of these columns.

Financial Snapshot Matrix

Snapshot	Excellent	Very Good	Good	Fair	Poor	Insufficient
Savings	2-6 mo.	$3,500	$1,000	$500	>$500	None

A: Excellent: If you\’re operating in the \”excellent\” column, your savings rate is the equivalent of 2-6 months of living expenses. This means that if you have a monthly operating cost of $3,800, you will need to save between $7,400 to $22,800 to have a solid savings for the event of a job loss, furlough, or extended leave. 

B: Very Good: If you\’re operating in the \”very good\” column, your savings rate is the equivalent of $3,500 or one-months living expense, whichever is greater. Being that historically most Americans cannot cover a $1,000 emergency without going into debt, this amount will ensure you have at least enough to cover a major vehicle repair, a short furlough, or short-term unpaid leave. 

C: Good: If you\’re operating in the \”good\” column, your savings rate is the equivalent of $1,000, allowing you to cover an expense like a major appliance. 

D: Fair: If you\’re operating in the \”fair\” column, your savings rate is the equivalent of $500 to cover a minor expense like a set of tires. This amount is not typically enough to have in a rainy day fund for most people to cover their lifestyles, but it\’s a good start.

E: Poor: If you\’re operating in the \”poor\” column, your savings balance is less than $500, covering limited minor expenses. You will need to build upon this amount.

F: Insufficient: If you\’re operating in the \”insufficient\” column, you do not have a savings account at all, or if you do, it does not have anything in it. This means that you\’re susceptible to going into debt if you have an emergency arise.  

Building an appropriate savings depends on so many factors, including the volatility of employment, sources of income, family size, and economic cycle. No matter the amount of savings you have, you want to ensure that these funds are out of sight and mind. Be sure to place these in an unreachable place from everyday expenses, such as a money market or high-yield savings account. These accounts will also help you ensure that you\’re keeping up with or beating the inflation rate.

After reviewing each column regarding the savings category, which column do you find yourself currently operating within?

Set the goal to increase one level in the next three months.

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