AICPA Index: Americans’ Financial Satisfaction Hits 24-Year High

Americans are experiencing their highest level of personal financial satisfaction in the 24-year history of the AICPA’s Personal Financial Satisfaction Index (PFSi). The PFSi is calculated as the personal financial pleasure index minus the personal financial pain index. With a 2.6-point increase from the prior quarter, the Q3 PFSi measured 25.9.

“By and large the pleasure index factors have been trending up for some time as we have mostly recovered from the great recession,” says Mark Astrinos, member of the AICPA personal financial satisfaction credential committee. “While we all benefit from the surge of capital markets and real estate growth, it’s prudent that our financial health safeguards remain in place. This means ensuring that you re-balance portfolios to reduce risk and maintaining adequate cash reserves for when economic times are more challenging.”

The Personal Financial Pleasure Index, at 68.1, is up 2.1 points from the previous quarter, continuing its steady increase and setting a record for the third quarter in a row. The Personal Financial Pain Index, at 42.1, saw two factors decrease from the previous quarter: a 2.9-point decrease in loan delinquencies and a 2.0-point drop in the inflation index.

The AICPA Economic Outlook Index, which captures the expectations of CPA executives in the year ahead for their companies and the U.S. economy, had a recent low point occur in Q1 2016.  Since then, there has been an uptrend (about 5% per quarter for 2016).

“As the stock market drives American’s financial satisfaction to new all-time highs, many are beginning to question whether this trend is sustainable,” says Robert Westley, member of the AICPA personal financial satisfaction credential committee. “As individuals begin to fear a pullback, it’s important to keep in mind that the stock market is largely unpredictable and any attempts to time the market often prove to be ineffective at best, and injurious at worst. An investor’s best defense against the market’s unpredictability is to have a solid financial plan that is irrespective of how the market is performing. It’s key to your financial plan to align your portfolio with your personal financial goals and their corresponding time horizons.”

Additional findings and information on the PFSi is available here.