“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.