Financial security index
Man thinking about job
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Many with jobs live in fear of losing them

"I would define budgeting as making sure you're living within your means and that you are saving money for the future," says Carrie Coghill, director of consumer education for FreeScore.com, a consumer credit information organization. "In my experience, only around 20 percent of people budget in this way."

The envelope, please

There are many strategies for budgeting, but experts say the best method is the one you incorporate into everyday life. The so-called envelope method is a tried-and-true example.

For the uninitiated, with the envelope system, a saver tracks expenses for one month. At the end of the month, it's clear how much goes for various categories such as housing, food, transportation and bills.

From there, the consumer puts an allotted amount of money in an envelope for each area. Once that envelope is empty, spending for that category stops until the next paycheck.

In an age of email and texting, of course, a system based on envelopes may seem antiquated. So technology offers an upgrade. Some online banks allow customers to open several free accounts and name them according to their purpose. Even better, you can set up automatic withdrawals and deposits from your primary account to your various virtual envelopes.

"It just takes a little discipline for the first few months to get the knack of living by a budget, and then it becomes empowering to the point that you want to live within your budget to see how much you can save," says Ravsten.

But the FSI also suggests many Americans aren't budgeting because they believe in the future, but because they're worried about it. "The overall Financial Security Index is down from 97.8 in June to 95.6 in July, the lowest reading since April," McBride says.

The accompanying slideshow gives detailed results of the latest FSI survey, along with analyses by selected experts and advice to help consumers cope in these uncertain economic times.

The survey was conducted by Princeton Survey Research Associates International from July 7-10, 2011. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is ±4.0 percentage points.

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