How Does Your Savings Account Measure Up to the American Middle Class?

Having money in a savings account can help you sleep a little easier at night. It provides a critical buffer in an emergency and it can also be your ticket to future purchases that enhance your life, be it a new home or a vacation. It's essential if you hope to ever leave the workforce, too. It's no wonder we're all trying to earn as much money as we can.

We all have our own financial goals, but it can still be interesting to see how you stack up to other Americans. Here's a look at how much the typical middle-class American has in savings -- and how you can grow yours faster.

Here's how much the typical middle-class American has in savings

Nearly all middle-class Americans have some sort of transaction account, according to the Federal Reserve. There are several types of transaction accounts, the most common of which are checking accounts and savings accounts. 

The research doesn't break down how much Americans have in each type of transaction account, but it does give us a pretty good idea of how much Americans of all income levels have in the bank. The table below gives the median and the mean for all income groups identified by the Federal Reserve.

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Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

There's a pretty big discrepancy at all income tiers between the median and mean figures. This is typical with financial data. You calculate the mean by adding all the numbers in a data set and dividing by the number of items in the data set. This makes it easy for one person with an abnormally high savings account balance to skew the mean upward. 

The median is a better representation of what the typical person has in savings. It represents the middle point in a data set. So that's what we'll focus on.

The average middle-class balance depends on what you define as middle class. But if we look at the middle quintile -- those that fall between 40% and 60% in terms of their income -- we get an average transaction account balance of $7,400. Keep in mind that this includes money in checking accounts as well. 

It's not all that much money when you consider that a portion of it is likely used to cover monthly living expenses. For some, it may not even be enough to cover a basic emergency fund. But there are ways to grow this over time.

Build your savings account balance fast

You probably already know the two key ways to grow your savings account balance: increase your income or decrease your spending. Increasing your income can look like negotiating a raise, working overtime, or starting a side hustle. Decreasing spending could involve paying down credit card debt or reducing unnecessary purchases. 

But that's not the only way to grow your savings. A high-yield savings account can also help. These accounts can earn you more than four times the national average interest rate on your funds and most don't charge a maintenance fee either. If you're interested in opening one, the Discover® Online Savings account is a great option.

These accounts are the closest you'll get to effortlessly growing your savings. All you have to do is put your money in them and leave it there. How much you earn will depend on your balance and interest rates at the time. If you earned a 4.00% APY on the average $7,400 middle-class bank account balance right now, you'd earn nearly $300 in a year, assuming a steady interest rate.

It only takes a few minutes to open one of these accounts and you can do it from the comfort of your own home, so there's really no reason not to.