Financial Security Index jumps in January

Financial Security Index

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If prognostications based on the Mayan calendar are correct, 2012 could be the year the world ends. But Americans feel fine, Bankrate’s new survey suggests.

The Financial Security Index rose for the second month in a row to a seven-month high of 97.3, the highest since June’s reading of 97.8. While that is encouraging news, an index value below 100 reveals less financial security relative to a year ago.

Each month, survey respondents are asked five questions designed to gauge their level of financial security, plus a sixth “wild card” question on another personal finance topic. In January, survey respondents were asked about whether they spent more or less than expected over the holidays. Sheyna Steiner reports the findings in her story, “Holiday spending kept under control.” 

A new outlook in 2012

Job security turned positive for the first time since June, with 20 percent of Americans feeling more secure than a year ago while 17 percent feel less secure. Two months ago in November, just 13 percent of Americans felt more secure, and 28 percent felt less secure.

Savings remains the Achilles’ heel of financial security, with those feeling less comfortable than a year ago, at 41 percent, outnumbering those feeling more comfortable, at 14 percent, by nearly 3 to 1. This was only slightly changed from December when 42 percent were less comfortable. Those feeling about the same increased a notch from 42 percent to 43 percent.

Not too surprisingly, those younger than 30, college grads and households with incomes of $75,000 per year or more continue to be most comfortable with their savings. Meanwhile, among the least comfortable are households with incomes less than $30,000 and the unemployed.

Americans are neutral on debt, with 23 percent saying they’re more comfortable and 23 percent saying they’re less comfortable while 49 percent say their comfort level is about the same as the year before. This is the first time since June that Americans’ feelings didn’t skew toward less comfortable on debt.

Feelings on net worth turned positive for the first time since July, with 24 percent of Americans reporting higher net worth than one year ago and 22 percent reporting lower net worth.

Those younger than age 50 are most likely to report higher net worth while those age 50 and older are most likely to report lower net worth than a year ago. The same contrast exists on the basis of income. Households with incomes of $75,000 a year or more were most likely to report having higher net worth than last year while those with incomes of less than $30,000 tended to report lower net worth.

Many Americans still feel their overall financial situation is negative, with 28 percent saying it is worse than one year ago and 23 percent saying it is better. But the gap between those saying worse and those saying better has narrowed each month since October.

For more details on the survey results, see Bankrate’s story, “Americans upbeat at start of year.”