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Americans upbeat on finances

By Greg McBride, CFA · Bankrate.com
Tuesday, January 24, 2012
Posted: 3 pm ET

Our January 2012 Financial Security Index came out today, and I spent some time discussing it with Tony Conley of WILS-AM in Lansing, Mich. Below is a transcript of the interview.

Tony: Americans' financial security rises again, this is according to some information at Bankrate.com. That's good news -- tell us about it.

Greg: Yes, it is. Second month in a row we saw a big uptick in terms of how consumers are feeling about their financial security. Couple of interesting aspects to that, Tony. Job security is one area that turned positive for the first time since the middle of last year. Same thing with net worth. In both cases, more people are reporting increased or better job security relative to a year ago than worse job security.

Same thing on net worth: More people are reporting higher net worth rather than lower net worth when compared to 12 months ago. So those are two positive indicators there. And debt is a pretty neutral reading. Whereas people had been leaning more toward the side of feeling less comfortable with the debt they have now compared to a year ago, it's now even between those that are feeling better about the debt that they have and those that are feeling less comfortable.

Tony: And Greg, you wrote that "savings is still the Achilles' heel of financial security."

Greg: Yes, it really is. When we asked people, "How do you feel about the savings you have now relative to what you had 12 months ago?" those who say they are less comfortable with the savings they have now outnumber those who are more comfortable by a margin of almost 3-to-1. And that's been a pretty consistent reading in recent months. So even though we're seeing some improvement in terms of how people feel in other areas -- job security, net worth, even in debt -- not so on the savings front. And that's despite the fact people have managed to squirrel away a little bit more money. But the steady upcreep in household expenses, the fact incomes are flat and that they're not earning much on their savings, I think that really undermines the feeling of progress.

Tony: Alright, Greg. And now that we've had a chance to take a good look at holiday shopping, how did we fare?

Greg: A little bit more than half of Americans -- 56 percent -- said they spent about what they'd expected this holiday season. People didn't go crazy. Only 17 percent said they spent more than expected. And about 1 in 4 households actually spent less than what they had expected coming into the holiday season.

Tony: If folks want to get better at personal finance, one of the best places they can go is Bankrate.com. Greg McBride is their senior financial analyst. Thanks so much, Greg.

Greg: Thanks a lot, Tony. Have a great day.

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