Americans Now Feel Even More Financially Insecure
According to Bankrate.com's latest Financial Security Index, taken Aug. 4 through Aug. 7, during a hellish week when the U.S. credit rating fell and stock markets swung wildly, consumers' feelings about their savings, net worth, job security and overall financial security reached a new level of despair for 2011, with the index hitting a low of 92.3, down from 95.6 the month before. On the scale, 100 signifies that consumers feel the same level of financial security as they did 12 months earlier.
Some 47% of those polled said they are less comfortable with their current savings, compared to a year ago. Then too, 35% said their overall financial situation is worse than this time last year, while only 19% said they are doing better.
Americans are more skittish about their jobs, with one third of those between 30 and 64 years old feeling less secure in their jobs than they did at this time last year, according to the Index.
They aren't saving as much either. Nearly 30% said they are saving less for retirement than they were a year ago, while only 15% said they are saving more.
"Clearly, consumers' sense of financial security has been shaken in recent weeks," says Greg McBride, senior financial analyst with Bankrate.com. "That fear can further jeopardize the health of the economy, if people choose to shy away from big-ticket and discretionary purchases."
Instead of panicking, it's time to put best practices in place.
"Nothing helps better when there is economic uncertainty than knowing you have an emergency cushion," says McBride. "Boost your emergency savings and you'll not only solidify your financial position, but also have peace of mind."
In addition to increasing emergency funds, take the pressure off the "what ifs" by reducing your debt level. "Paying down debt will create a little breathing room in your budget," says McBride.
And right now, when many investors feel like they're gasping for air, breathing room is an excellent thing to have.