Are Americans Becoming More Financially Secure?
Over the past several years, many of us have heard reports of large percentages of people living paycheck to paycheck, high foreclosure statistics, and inadequate retirement savings across the board, but especially among those near retirement. Such reports have led some people to the conclusion that Americans — as a whole — are not as financially secure as they once were, and that many people are still recovering from the recession from a few years back.
Although a large percentage of the American population faces economic insecurity — 39% of adults and 55% of children, according to a report created last year by Wider Opportunities for Women — financial security has actually increased over the past few months.
Bankrate.com’s financial security index charts for October indicate the financial security index at 101, which is an increase of 0.6 when compared to last month. This month’s most recent index represents a giant increase when compared to October’s index from last year, which was only 97.4. Any index number over 100 indicates that financial security is increasing, while numbers below 100 indicate a decline in overall financial security.
Overall, two-thirds of survey respondents said they have a reason to limit how much they spend each month. This time least year, a significantly larger portion — nearly 75% — said they had a reason to limit spending. This could be a sign that more people have spending under control as they are gaining control of their budgets.
Three out of ten (29%) respondents said their reason for imposing spending limits on themselves was that they intend on saving more money. This is an increase from last year’s survey, when only 20% of people cited savings as a reason why they wanted to limit their spending. There were also a handful of respondents — 11% — that said they would not spend more simply because they were worried about the economy. This time last year, 20% of people said their worry about the economy was the primary reason for limiting spending.
When Bankrate asked about job security, the survey responses indicate things may be going in a positive direction. Nearly one-fourth (25%) of respondents said they feel higher levels of job security than they did 12 months ago, and 62% of respondents said they feel about the same level of security as they did a year ago. Only 13% of people said they feel less secure about their jobs. But last year, 26% of people said they felt these lower levels of job security. This year’s improvement may be a sign that people are feeling better about the state of the job market.
Savings and debt
Around two-thirds of respondents (65%) said they feel either equally comfortable or more comfortable with the savings they have today than they did last year. One-third (35%) reported a lower level of comfort in their savings than last year. When we examine last year’s survey, however, nearly four out of ten (38%) reported lower levels of comfort in the amount of money they had in their savings. There was a marked improvement over the course of 12 months.
The responses pertaining to debt paint a similar picture, as only 20% of people reported lower levels of comfort with their amount of debt this year. But last year, 24% said they felt such discomfort.
Bankrate asked survey respondents to calculate their net worth by adding up all of their assets — including real estate assets — and then subtracting all liabilities. A surprising 83% of respondents reported an equal or higher net worth than last year. Considering so many people are increasing their net worth, it’s no surprise that 77% of people said they feel more comfortable with their overall financial situations.
Given this month’s survey results, things seem to be looking up for a significant portion of American households. What does your financial situation look like these days? Is you financial security improving?