NEW YORK (MainStreet) — The increasing financial fragility of the average American may be leading to a down market and increase in the use of predatory sources of credit.

“Financial insecurity can create a downturn in the stock market because it causes people to be more risk averse,” said Dr. Jeannette Raymond, a licensed psychologist with a counseling practice in Los Angeles. “Every penny invested in the stock market becomes a point of uncertainty that is too much to handle.”

Some 26% of Americans feel financial insecurity, according to Northwestern Mutual's 2014 Planning and Progress Study. That’s down from 32% a year ago.

"On one hand, the stock market seems to set new records every day,” said Greg Oberland, president with Northwestern Mutual. “On the other, we are challenged by high unemployment and a slow-growth economy."

The unemployment rate is holding steady at 6.1%, according to the U.S. Bureau of Labor Statistics.

“Insecurity often comes from not having enough to feel comfortable,” said Eldar Shafir, professor of psychology and public affairs at Princeton University and co-author of Scarcity: Why Having So Little Means So Much (Times Books 2013). “Smarter and more friendly, trusted, financial services, such as savings for a rainy day, as well as better wages and more reliable working hours could all ease some financial insecurity.”

Until then, an increasing number of consumers are turning to short-term loans. In fact, some 60% of total payday loans will be obtained online by 2016, according to Stephens Inc.

"Most consumers don't have the ability to get $500 or $600 in an emergency through their banks or credit unions,” said Peter Barden, a spokesman for the Online Lenders Alliance. "Credit card limits have been reduced and equity loans have been reduced so people are increasingly looking to alternative financial services companies for short-term credit."

Although instant and easy access to cash is comforting, it can contribute to feelings of financial fragility.

“People who use payday loans tend to see themselves as victims of circumstance,” Raymond told MainStreet. “They have little internal motivation to budget, minimize loan payments or avoid them all together. When the time comes to repay the loans, they feel victimized, taken advantage of and that they should be let off the hook.”

And money worries contribute to confusion, according to a Princeton University study by Shafir.

“Financial stress can actually lower a person's IQ by up to 13 points, which is the equivalent of losing a night's sleep,” said John Greco, producer with a new television show called "Thinking Money" that is premiering this fall.

Separating fear and anxiety from actual monetary circumstances can create a picture of clarity.

“The misuse of money is a symptom just like overeating but with different consequences,” Raymond said. “Therapy is a way for people to relearn how to manage their negative feelings and insecurities that lead to addictions so that they can conceivably consider having money on which to retire.”

Hitting bottom financially is not necessarily a negative if it leads to change quicker.

“When other people stop lending and rescuing another, that immediate crisis is a turning point that forces an individual to care about themselves, secure gainful employment and budget appropriately,” said Raymond.

--Written by Juliette Fairley for MainStreet