Stagnant wages major offender in declining security



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A new report from BankRate says that many American customers are not following basic financial disciplines, such as monitoring spending and keeping a budget. This, claims the report, is just one reason why the Financial Security Index has dropped to its lowest stage since March.

The figures are dropping

Though the economy may have grown recently, it was not enough for consumers to feel more confident about the economy than they did a few years ago. Since March, the Financial Security Index by BankRate showed that it was at its lowest rate. It was released on July 25 and was a bit surprising.

BankRate compiled its report from the reactions of about 1,000 adult customers polled by telephone in early July. The index showed declines in all five of the key areas it tracks: job security, amount of savings, amount of debt, net worth and overall financial picture.

The job security you want

Of those polled across the country, the least decline was seen in job security. That is in spite of the unemployment rate continuing to hover at more than eight percent.

Greg McBride is the senior financial analyst at Bankrate. He explained:

"Interestingly, despite another poor jobs report in early July, feelings of job security were the least affected and remain the component of financial security that Americans feel is most improved relative to one year ago. Just 19 percent of Americans feel less job security than one year ago."

A savings account

About 40 percent of customers said they were not as secure in savings as they were last year, and only 16 percent said they felt better than they did a year ago about their savings.

Considering debt

American consumers are feeling more overwhelmed by their debt. Almost a quarter of those polled -- 24 percent -- expressed increased discomfort with their level of debt. That is up from 18 percent in June.

Overall security feeling

About 28 percent of respondents reported a drop in their overall finance security. Another quarter said they really felt better with their situation now than they did in 2011.

The study concludes that the lack of wage growth is one of the largest factors preventing individuals from paying down debt, accruing savings and moving ahead.

According to McBride:

“What's really undermining consumer progress on financial security are stagnant wages. If incomes aren’t growing it’s difficult for people to make headway on debt and savings.”

Learning how you can manage cash

But the economy, which McBride expressed as "stuck in first gear," is not the only culprit in decreasing financial security. Much of the trouble, claims McBride, could possibly be helped with basic budgeting and expense monitoring within each household:

"For a nation where just 1 in 4 households has an adequate emergency savings cushion, the fact that only 60 percent adhere to a fundamental behavior such as tracking expenses reveals a key weakness."


BankRate. com