5 Signs You're Financially Average — And How to Improve

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There are plenty of average statistics that help us identify trends. The average height for women in the U.S. is 5 feet 4 inches. The average American lives to the ripe old age of 78.74 years. The average four-year-old asks 437 questions a day — OK, that's actually a myth. However, spend an afternoon with a pint-size philosopher, and that myth may be more accurate than we think.

When it comes to personal finances, aiming for average is a trend you want to avoid in most cases.

Data from the 2014 U.S. Census lists the average American salary at just north of $70,000. But the average American is living close to the edge, financially speaking. The average household debt is $132,000. The average new car loan term is 65 months. The average person between ages 55 and 64 only has around $104,000 put away for retirement. And the average American doesn't have $500 in a savings account to cover emergencies.

If you're living from paycheck to paycheck, unable to pay your credit card balances in full each month, or neglecting your retirement savings, chances are you're an average American. Here are a few things to focus on in order to relocate to the land of better-than-average.

1. Pay off debt and keep debt low

Improving your savings rate is difficult when living up to or beyond your income levels is buffered by debt. Continually taking on additional payments can make it very difficult to redirect disposable cash to meet savings goals. Eliminating debt carried month-to-month on credit cards, student loans, or auto loans will free up money, save on interest and late fees, and remove the added stress of managing those bills every month.

Planning your spending, saving to pay cash for big ticket items, and building an emergency fund will stave off the need to use debt to support your lifestyle. You may need to work with a financial counselor to help you craft a plan to improve your money management habits and pay off debt quickly. Paying off and staying out of debt will make you an above-average financial rock star in this country. (See also: 7 Easy First Steps to Paying Off Debt)

2. Become a savings superstar

You might not be able to save 60 percent of your income, like the blogger behind DistilledDollar.com did, starting tomorrow. Actually, Matt's ability to save evolved over the past three years. "We started out saving just 10 percent of our income," he says.

By looking at ways to cut back on simple expenses like his dry cleaning or making meals at home, Matt was able to make adjustments that added up. Moving to a smaller apartment within walking distance from his job allowed him to cut his overhead and ditch the need for a car. Fewer expenses means Matt keeps more of his hard-earned cash.

When you save 10 percent of your income (excluding retirement savings), you're already doing much more for your savings than the average American. (See also: Why Your Personal Savings Rate Matters)

3. Learn to invest

Losing money is not on the average person's to-do list. So, I understand why many Americans tread lightly here. But learning to invest your money is a must if you want to break out of the average doldrums of financial life.

Hilary Hendershott, certified financial planner and host of The Profit Boss podcast, says that most people do not max out their 401(k) retirement accounts. "Start there. You can save $18,500 a year if you're under 50," she says.

Beyond maximizing the benefits of your tax-deferred investment options, dipping your toe into the world of investing may start with interviewing financial advisers to help you navigate these new waters. Seek out independent advisers who are fiduciaries — this just means they will advise you based on your best interests.

However you decide to begin, Hendershott suggests you steer clear of national financial news television programs. "It's all financial drama. There's always something wrong. It's not their job to help you make prudent choices. It is their job to get your eyes on the screen to sell advertising," she says. (See also: Want Your Investments to Do Better? Stop Watching the News)

4. Practice an attitude of gratitude

When we're living beyond our means using debt to prop up an inflated lifestyle, a lack of contentment may be the issue. A 2016 Harris Poll identified what they called the American Happiness Index to be 31 out of a scale of 100. That number is down slightly, but hovers in the low 30s pretty consistently, year to year.

Appreciating what you have until you can save and pay cash for its replacement will help you avoid living financially overextended and being unhappy like so many of your neighbors.

5. Audit your associations

Speaking of those around you, Jim Rohn famously quipped, "You're the average of the five people you spend most of your time with." Rohn, a motivational speaker and successful businessman, was likely leaning on the law of averages to back up his claim. That is, the outcome in any situation will be the average of all potential outcomes.

If the theory is correct, to improve financially, start hanging with other people who are fiscally responsible. Think about it. If your girlfriends are known for planning last-minute getaways and you have a penchant for plastic, these trips can contribute to financial instability. If your family places a premium on material items without regard for the ability to pay, you might be absorbed into that overspending way of life.

Should you drop your friends and family like a bag of bricks because they overspend? That's not realistic. Instead, try spending more time with those who may be less financially responsible on your terms. Invite them to events and outings that are budget-friendly. Meanwhile, spend more time with those in your circle who will appreciate and support your journey to financial self-improvement. Seek out groups in the form of investment clubs or money meetups that will expose you to like-minded buds. In this way, you can balance out the negative financial influences. (See also: 10 Types of Friends Who Are Costing You Money)

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