How Much Should I Have Saved by 23? Your Early 20s Savings Reality Check

Let’s be real – when I was 23, I was more concerned with happy hour specials than retirement accounts. But looking back, I wish someone had given me the financial wake-up call I’m about to give you. Your 20s are actually the financial sweet spot where small savings can turn into MAJOR money later on. So how much should you actually have saved by 23? Let’s break it down.

The Hard Truth About Average Savings in Your Early 20s

According to the Federal Reserve Board’s 2022 Survey of Consumer Finances, the average American under 35 has about $20,540 in savings. But that’s a pretty broad age range! At 23 specifically, you’re likely on the lower end of that spectrum.

Truth is, there isn’t a magic number that works for everyone. Your savings goals should connect to YOUR lifestyle and situation. Are you drowning in student loans? Just started your first “real” job? Still living with parents? Each situation demands different savings strategies.

The 50/30/20 Budget Framework for 23-Year-Olds

One popular approach is the 50/30/20 budget framework

• 50% of your income goes to needs (rent, groceries, etc.)
• 30% goes to wants (dining out, entertainment)
• 20% goes to savings and debt repayment

Looking at the median monthly salary for 20-24 year olds ($3,136), here’s what that would look like:

So ideally, you’d be saving around $627 per month. That’s about $7,524 per year! But if that number makes you laugh nervously, don’t worry – many 23-year-olds aren’t hitting this target.

Emergency Fund: Your First Savings Priority

Before dreaming about retirement or vacation funds, you need an emergency fund. This is non-negotiable! According to the data, people under 25 have average monthly expenses of $4,130

That means your emergency fund targets should be:

• Minimum goal: 3 months of expenses = $12,390
• Ideal goal: 6 months of expenses = $24,780

I know those numbers seem HUGE when you’re 23. But this is a goal to work towards, not something you need immediately!

Retirement Savings: Starting Early is Your Secret Weapon

Even though retirement feels like a million years away at 23, this is literally THE BEST time to start saving for it. Why? Two words: compound interest.

By age 30, the general recommendation is to have 1x your annual income saved for retirement. If you start at 23, you’ve got 7 years to build toward that goal.

Check out how powerful early saving can be:

Someone who starts saving 15% of their income at age 25 could have $1,730,857 by age 65! But if they wait until 35, that drops to $884,187. That’s nearly HALF the money for just waiting 10 years!

Practical Savings Goals for 23-Year-Olds

Based on all this data, here’s what I think are reasonable targets for most 23-year-olds:

1. Short-term emergency fund: $1,000-$5,000 (enough to cover a car repair or medical emergency)
2. Progress toward full emergency fund: Working toward 3-6 months of expenses
3. Beginning retirement contributions: At least enough to get any employer match in your 401(k)

If you’ve got those three things going, you’re already ahead of many people your age!

How to Actually Build Your Savings at 23

Here’s some real talk about how to save when you’re young and probably not making much money:

1. Automate Everything

Set up automatic transfers to your savings account the day after payday. You can’t spend what you don’t see! Even $50 per paycheck adds up.

2. Take Full Advantage of Your Employer Benefits

If your job offers a 401(k) match, contribute at least enough to get the full match. It’s literally free money!

3. Use Savings Buckets

Ally Bank and other financial institutions offer “buckets” within savings accounts so you can organize your money by goal without opening multiple accounts. This makes it easier to track progress toward specific targets.

4. Boost Your Income

In your early 20s, your earning potential is your biggest asset. Consider:

• Asking for a raise
• Taking on a side hustle
• Learning new skills to increase your value

5. Celebrate Small Wins

Saved your first $1,000? That’s huge! Treat yourself (reasonably) when you hit milestones.

What If You’re Starting From Zero at 23?

Maybe you’re reading this and thinking “I have literally zero saved and I’m already 23!” First, take a deep breath – you’re still SO young. Second, here’s a simple starter plan:

Month 1-3: Save $500-1,000 as a mini emergency fund
Month 4-12: Start contributing 1-5% to retirement while building your emergency fund
Year 2: Increase retirement contributions to 10-15% if possible

Why Your 20s Are So Critical for Saving

Your 20s are a financial superpower because of time. The money you save now has decades to grow before you need it in retirement.

Let’s look at an example: If you save $100 per month starting at age 23, with an average 7% return, you’ll have about $219,000 by age 65. If you wait until 33 to start, you’ll need to save $200 per month to reach the same goal!

Don’t Forget Balance – You’re Only 23 Once!

While saving is important, don’t sacrifice all your experiences just to hit a savings number. Your 20s are also about building memories, trying new things, and figuring out who you are.

Find the balance that works for YOU. Maybe that means saving 15% instead of 20%, or building your emergency fund more slowly so you can still travel occasionally. That’s ok!

My Personal Experience

When I was 23, I had about $800 in savings and thought I was doing great. Looking back, I wish I’d started putting even $50/month into a retirement account. Those early contributions would be worth so much more now!

But I also don’t regret some of the experiences I spent money on. The key is finding balance – save enough to set yourself up for success, but not so much that you’re not enjoying your youth.

The Bottom Line: A Realistic Savings Target at 23

If I had to give one target number for a 23-year-old, I’d say aim to have $5,000-$10,000 saved by your 24th birthday. This gives you a solid start on an emergency fund while being an achievable goal for most young professionals.

Remember, the most important thing isn’t the exact dollar amount – it’s establishing good savings habits that will serve you for decades to come. Start where you are, save what you can, and consistently work toward building your financial security.

Your future self will thank you!

What are your biggest challenges when it comes to saving in your early 20s? Have you started saving for retirement yet? I’d love to hear your experiences in the comments!

There is no single age to have $100k saved, as it depends on your income and goals. However, financial experts suggest that age 30 is a good benchmark, with some advising you to have saved about one times your annual salary by then.