Fiscal cliff uncertainty drops Americans' faith in finances
By Paula Aven Gladych
Uncertainty over the impending fiscal cliff brought the Bankrate.com Financial Security Index down to 97.1 in November, the third-lowest reading of the year. All of the components that make up the index—debt, net worth, savings, job security and overall financial situation—slipped over the past month.
According to Bankrate.com, Americans are only feeling good about net worth compared to a year ago.
Sentiment regarding job security and Americans’ comfort level with their debt also swung into the negative territory in November.
When asked about their top financial priority, nearly one-third of Americans (32 percent) said staying current or getting caught up on the bills. "This is consistent with the stagnant household incomes many people are experiencing, as well as continued escalation in food, healthcare and energy costs that are squeezing households' buying power," said Greg McBride, CFA, Bankrate.com's senior financial analyst. "The second-most common response was paying down debt (23 percent), followed by saving (20 percent). No surprises there."
Staying current or getting caught up on the bills was the most common response in each age bracket, indicating that household income was the key variable in assessing top financial priorities. Those most likely to say that staying current or getting caught up on the bills was their top financial priority were those households with income below $50,000 per year.
For households with annual income of $75,000 or more, paying down debt and saving were the most-cited financial priorities. In fact, paying down debt and saving became more common responses as income increased, while staying current or getting caught up on the bills were less common as income increased. Providing financial assistance to family or friends was cited fairly evenly across all income groups.
Financial Security Index readings lower than 100 indicate that Americans are feeling worse about their financial security than 12 months previous. The index has been below 100 in 22 of the 24 months since its inception in Dec. 2010.
The new survey was conducted by Princeton Survey Research Associates International via telephone from Nov. 8-11, 2012.
Originally published on BenefitsPro.com