How Much Does the Average 20-Year-Old Have in Savings?

Young adults in their early twenties face unique financial challenges and opportunities. Many are navigating significant life transitions, such as entering the workforce, pursuing higher education, or establishing independent living. These moments influence their financial behaviors and saving capacity. Understanding typical savings patterns for 20-year-olds offers insights into their financial health.

Average and Median Savings for 20-Year-Olds

When examining the financial standing of 20-year-olds, it is important to distinguish between average and median figures. Averages can be significantly skewed by a small number of individuals with very high wealth. Median figures, representing the midpoint, often provide a more representative picture for this demographic.

Net worth, a comprehensive measure of financial health, is calculated by subtracting total liabilities from total assets. Assets typically include cash in bank accounts, investment portfolios, equity in real estate or vehicles, and other valuable possessions. Conversely, liabilities encompass various forms of debt, such as mortgages, credit card balances, and student loans. For many in their early twenties, significant student loan debt can heavily impact their net worth, sometimes resulting in a negative figure.

A 2024 analysis indicated a median net worth of $7,638 and an average net worth of $113,084 for 20-year-olds. Another report, using 2022 data, showed a median net worth of $10,800 for those aged 20-24 and $30,160 for those 25-29. These figures underscore the financial progression that often occurs as young adults advance through their twenties, gaining more income stability and potentially reducing initial debts.

Many 20-year-olds are beginning to build retirement savings, often through employer-sponsored plans like 401(k)s or individual retirement accounts (IRAs). For those in their twenties, the median retirement account balance was $37,688, with an average of $97,440. This indicates that starting early, even with smaller contributions, can lead to substantial growth over time due to the power of compounding. These statistics illustrate the diverse financial situations within the 20-year-old demographic.

Factors Shaping Savings for Young Adults

Several interconnected factors significantly influence the savings capabilities and habits of individuals in their early twenties. Income sources play a substantial role, as many 20-year-olds are in entry-level positions, which often come with lower salaries compared to more experienced workers. Despite potentially higher wages and job opportunities than previous generations, essential expenses often limit consistent saving. Many young adults take on multiple jobs or side hustles to supplement income.

Educational background and the presence of student loan debt also heavily shape financial outcomes for young adults. The rising cost of higher education means that a significant number of 20-year-olds carry substantial student loan burdens. For instance, in 2022, borrowers aged 20 to 25 had an average student debt of approximately $21,000, which was 13% more than millennials at the same age after adjusting for inflation. This debt can diminish net worth and reduce the amount of discretionary income available for saving, impacting both short-term goals and long-term retirement planning.

The prevailing cost of living, especially housing, significantly hinders saving. Young adults today pay about 31% more for housing than millennials did a decade ago, adjusted for inflation. Other essential expenses like car and health insurance have also risen. These elevated costs for necessities consume a larger portion of young adults’ incomes, leaving less for savings.

Financial literacy and personal spending habits are also influential. Many young people enter adulthood without a strong understanding of money management, with nearly three out of four teenagers lacking financial literacy. Developing budgeting skills, understanding the difference between needs and wants, and learning to use credit responsibly are foundational for building a secure financial future. Parents often significantly influence young adults’ financial habits, especially regarding saving and spending.

Broader economic conditions further complicate the financial picture for 20-year-olds. Factors such as inflation, recession concerns, and overall economic instability contribute to financial stress for this demographic. Recent economic shifts have disproportionately affected young workers, making wealth accumulation and financial independence more challenging. These factors create a complex environment where young adults navigate financial pressures while building savings.

Common Ways 20-Year-Olds Save

Young adults utilize a variety of financial tools to manage their money and build savings, ranging from basic banking products to more sophisticated investment vehicles. Traditional savings accounts remain a fundamental option, offering a secure and accessible place for funds. These accounts are useful for holding short-term savings, providing liquidity for immediate needs or unexpected expenses.

Many 20-year-olds also leverage high-yield savings accounts (HYSAs), which offer significantly higher interest rates than traditional accounts. These accounts are particularly suitable for accumulating emergency funds, often recommended to cover three to six months of living expenses, or for saving towards specific short-term goals like a down payment on a car. Some HYSAs can offer annual percentage yields (APYs) ranging from 4.35% to 5.00%, allowing savings to grow more effectively.

Checking accounts serve as a primary hub for daily financial transactions, enabling easy access to funds for bill payments and routine spending. Though not primarily for saving, they are a necessary financial tool for deposits and withdrawals. Many banks offer accounts with no monthly fees or overdraft charges.

For long-term wealth accumulation, early retirement accounts are highly advantageous due to the power of compounding. Employer-sponsored 401(k) plans are a popular choice, allowing pre-tax contributions to grow tax-deferred until retirement. Many employers offer matching contributions, which provides additional funds to an employee’s retirement savings, making it a valuable benefit.

Individual Retirement Accounts (IRAs), such as Roth IRAs, are another cornerstone for young savers. Contributions to a Roth IRA are made with after-tax dollars, meaning qualified withdrawals in retirement are entirely tax-free. For 2025, individuals under 50 can contribute up to $7,000 to an IRA, allowing them to benefit from tax-free growth over decades. Roth IRAs are often favored by young adults who anticipate being in a higher tax bracket later in their careers.

Beyond traditional savings and retirement vehicles, some young adults explore basic investment accounts. Brokerage accounts allow individuals to invest directly in stocks, bonds, mutual funds, and exchange-traded funds (ETFs). For those new to investing, robo-advisors can provide an accessible entry point by offering automated, diversified portfolios managed with minimal effort. These investment options enable young adults to pursue growth-oriented savings strategies, aligning with their long-term financial objectives.