I've been pondering a question: how can I really know if my savings are on track? The most straightforward way is to look at how much the average person of my age has saved. According to data from the Federal Reserve, Americans' savings vary quite a bit, but there are some average benchmarks worth referencing.

First, let's define savings. Savings are simply the money set aside for planned expenses or to handle unexpected situations. The Federal Reserve divides savings into two categories: transaction accounts (such as checking accounts, savings accounts, and money market accounts that can be accessed at any time) and certificates of deposit. Based on 2019 data, the average balance in Americans' transaction accounts is $41,600, but the median is only $5,300—this gap indicates that high-income individuals are pulling up the average.

Let's look at different age groups. Around age 25, the average savings is $11,250, with a median of $3,240. At this stage, many people are still paying off student loans or just starting their careers, so not saving much is normal. But this isn't a reason to give up on saving; instead, young people should consider opening high-yield savings accounts or contributing to a 401(k) plan, because the power of compound interest will show its benefits over decades.

By age 30, the data still shows an average savings of $11,250. But at this age, there are often more opportunities to accelerate savings—perhaps paying off student loans or getting a raise. This is the time to set clear goals: whether it's building an emergency fund, starting retirement savings, or saving for a down payment. Knowing your goals helps you allocate your income more wisely.

By age 40, the situation changes. For the age group 35-44, the average savings jumps to $27,900, with a median of $4,710. Most people are at their career peak, earning more and better able to save. At this stage, the focus might shift more toward investment returns rather than just savings, since investments can often yield higher returns.

So, how much should you save? A common recommendation is to set aside enough to cover 3 to 6 months of living expenses as an emergency fund. Calculate your monthly expenses, then multiply by 3 or 6 to determine your savings goal. This money can help you get through periods of unemployment or injury without resorting to debt.

Why is saving so important? The most immediate benefit is peace of mind. If your car breaks down or your pet gets sick, having savings means you can handle it right away without scrambling for loans. Additionally, if you keep your money in a high-yield savings account, you can earn some interest. Compared to using credit cards and paying high interest on overdrafts, the cost is much lower.

Want to speed up your savings? Start with a budget. Review your expenses item by item to find areas to cut back. You can also set up automatic transfers—each payday, automatically move a portion of your paycheck from your checking account to your savings account. That way, you don’t have to rely solely on willpower. Don’t forget to take advantage of 'windfalls'—tax refunds, rebates, inheritances, gifts, and cashback rewards—that can boost your savings.

As for where to keep your money, online savings accounts are usually a good choice: they offer competitive interest rates, low fees, and easy transfers. If you need a debit card or check-writing capabilities, money market accounts are also good. For money you won’t need in the short term, certificates of deposit are an option, though early withdrawals may incur penalties.

Overall, comparing your savings to the average American level can give you some perspective, but don’t forget that everyone’s situation is different. Income, expenses, and debt all influence your ability to save. The key is to make saving a daily habit and stick with it.