Americans up savings in down economy

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NEW YORK (CNNMoney.com) -- Uncertainty about the future of the economy has led many Americans to save more and pay off more debt, according to a study released Tuesday.

A survey from First Command Financial Services showed that Americans are feeling less secure financially in September compared to the previous month, as the economy continues to slow.

"People are increasingly worried about their position in the economy," said Scott Spiker, chief executive of First Command.

Consumers have seen their investments diminish as the stock market has fallen more than 30% over the last three months. Those losses have taken a toll on consumers' optimism about their personal financial situations.

Less than a third of Americans feel very or extremely confident about their finances, and only 26% said they expected their financial situation to improve next year, according to the study.

About two-thirds of families surveyed said they were concerned about the state of the economy, and a large percentage said they were also worried about the stock market and the value of real estate.

But there is one bright spot: the negative outlook has prompted many consumers to change their behavior, the study showed. As confidence falls, many have chosen to exercise prudence, paying down debt, and saving their money rather than spending it.

The amount of money that people are putting away into short-term savings rose to an average of $901 in September from $756 in August, up nearly 20%. Americans also socked away an average of $863 into retirement accounts, up from $560 last month, a boost of about 54%.

Meanwhile, the amount of money people used to pay down short-term debt such as credit cards, rose 6% to an average of $1,010 for the month from $953 in August.

"People seem to be tightening their belts, saving more, paying off more of their debt," said Spiker.

But the belt-tightening might only be a temporary response, as consumers lose confidence in the overall economy.

The study also showed that consumers aren't likely to continue their saving and debt-reducing behavior over the longer term. The number of respondents who said they would continue to pay down debt and put money into savings over the next month declined in September.

The study also found that the families who were most confident about their financial futures were ones that had some sort of financial plan for the future. One third of respondents said they had a financial plan through a financial adviser.

"If you have a financial plan, you're feeling more optimistic about controlling your financial well being," Spiker said.

First Command provides financial planning, advice and services to middle-income American families, particularly military families and federal employees. The company's Financial Behaviors Index surveyed 1,000 U.S. consumers between the ages of 25 and 70, with household incomes of at least $50,000 a year.