Averages by age: How much savings is good to have at 18?

Learning how to save money is an important life skill to have, especially for teenagers who may be earning their own money for the first time. Learning to save money early can help build savings account so you can do things such as help cover the cost of student loans, set up an emergency fund, or even help reach larger financial goals like buying a home later in life.

You may wonder, "How much money should I have saved by 18​?" It's a fair question and something people ask in every age bracket. There isn't really a catch-all answer for everybody. It really depends on your lifestyle and how much money you need to maintain it. Nonetheless, we break down how to set realistic savings goals tailored to your individual circumstances and provide practical tips to help teens effectively save money.

Why saving early matters: Building financial independence

Starting early is the best way to set yourself up for savings success, especially if you have long-term goals. Even if you have a family trust account to fall back on, developing savings habits early in life can have many long-term benefits.

• Future flexibility: The earlier you start saving, the more likely you are to have money in the bank when you enter adulthood. This will allow you to set up an emergency fund to cover unforeseen expenses, make the occasional splurge on a trip with friends, and more.

• Better financial literacy: Learning how to save part of your paycheck is a major stepping stone in financial literacy and will help you better understand how money grows in a savings account over time. That will come in handy if you want to learn how to invest as a teenager, start getting benefits from your job, and experience other financial changes in your life.

• Build financial independence: When you transition to adulthood from your teen years, you get new freedoms and responsibilities. This includes the financial independence to spend money how you want without worrying about parental approval or having to ask for money. From paying your own rent and phone bill to going to a concert whenever you want to, financial independence is a sweet thing, and early savings will help you achieve it.

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Everyone is responsible for their own finances in adulthood. You can always ask your parents for financial advice and help, but ultimately, it's up to you to cover your living expenses and reach your savings goals. Starting early will give you the experience necessary to enter adulthood ready to do just that.

How much should an 18-year-old have saved?

There hasn't been much research about teen saving. Nobody can say definitively how much money an 18-year-old should have, but what's clear is that it depends on several key factors, including:

• Current and expected future income

• Living expenses

• Financial goals

Of course, there are some situations that might impact how much you can save. You might be in part-time employment currently and can't save as well as you'd like. You might be paying for school and need to allocate more of your paycheck to student loans or academic costs.

National statistics and comparisons by age bracket

According to Board of Governors of the Federal Reserve System, people under the age of 35 have a median transactional account balance of $5,400 and a median retirement account balance of $18,800. The average savings balance by age, as you might expect, rises as you get older. After all, the average retirement savings of a 55-year-old who is close to retirement should be much higher than an 18-year-old's retirement savings.

Smart saving strategies for teens: Budgeting, goals, and growth

Saving is all about getting into good habits and staying consistent. We break down some proven strategies for teens below.

How much should teenagers save? The 20% rule explained

The 20% rule states that you should set aside 20% of your gross income to build a solid financial foundation. That means that every time you receive a paycheck, you should put 20% of the total, pre-tax amount into a savings or investment account.

Prioritizing short-term vs. long-term financial goals

Life costs money. Achieving your financial goals will likely require a significant investment and may require you to take on debt. But it's important to balance your short-term and long-term goals because usually, meeting the short-term ones will set you up for a greater chance at achieving the long-term goals.

For instance, college is a short-term goal. Once you've earned a degree, you'll likely be in line to earn more money, which can put you on the path of achieving a long-term goal of buying a house.

Building an emergency fund: How much to save and avoid debt

A good savings practice is to estimate your living expenses and ensure you have between three and six months of living expenses saved in an emergency fund. This will help you cover unforeseen expenses like medical emergencies, house problems, car issues, and more.

Debt isn't necessarily a bad thing. In truth, it's unavoidable for most people. However, you should try to avoid high-interest debts like significant credit card debt or loans for luxury products like cars or boats.

Maximizing savings: High-interest accounts and beginner investments

Not all savings strategies are equal. Setting aside 20% of your paycheck is a great start, but you should take advantage of high-interest savings accounts and investment opportunities to give your money a better chance to grow.

You can use Greenlight to research accounts and investments. If you have some disposable income, hiring a financial advisor could help you maximize your savings with financial products and strategies.

Start now: A smart way to help teens manage money

Learning to save at a young age will help you build stronger money habits as you transition into adulthood. You'll likely be better prepared to navigate financial emergencies, make better investments, and meet your financial goals. Learn how to get started with help from Greenlight's resources for teens.

Manage your money and safety. Ask your parents about Greenlight’s money and safety app for families. Invite them to sign up for Greenlight one month, risk-free.†

†Valid for new customers only. Subject to identity verification and minimum load requirements. Your first monthly fee will be billed to your parent wallet seven days after successful registration. To receive a refund of your first monthly fee, you must request to close your account on or before the day immediately preceding your first Monthly Billing Date. See the ‘Account’ tab of Settings by tapping the gear icon on the Greenlight app home page to confirm when your risk-free trial ends. See Terms for details.