A survey MagnifyMoney finds that the stimulus checks are a necessary reprieve for 69% of Americans
With millions of taxpayers slated to receive relief checks in the coming weeks, many are making plans for how to spend the unexpected windfall due to the coronavirus pandemic and the government relief package. A new survey from MagnifyMoney of more than 1,000 Americans reveals that for most, the relief check is a necessity. Nearly half of survey respondents said they plan to use the money on essentials like groceries and bills, underscoring the current fragile state of Americans’ finances.
- When asked how consumers are planning to spend their stimulus check should they receive one, the top two responses were paying for groceries and paying for bills. Additionally, 44% plan to save at least some of the money.
- The checks are a necessary reprieve for most of the survey respondents, as nearly 7 in 10 (69%) said they need the stimulus money.
- Another 26% said that while they don’t necessarily need the money, it will help. Just 6% said they don’t need it.
- Most of our respondents (40%) said the stimulus check will relieve “a few” of the difficulties they’ve been facing, while 10% said they’ll still be experiencing a significant level of financial difficulty.
- The good news is that 18% said the stimulus money will remove all of the difficulties they’re facing due to the pandemic, and another 17% said it will alleviate most financial difficulties.
- Consumers are split in terms of satisfaction with the monetary value of the stimulus checks. About 41% think the check amount is “just right,” though 39% think it’s too small. Only 4% thought the amount was too large.
- About half (49%) of respondents agree with the income limit proposed by the government. However, 21% think the threshold should be lowered so that higher income individuals would receive even less. On the other hand, 11% said there should not be an income limit.
- Some will have to wait longer than others to receive their funds. About 8% of our survey respondents don’t have a bank account, which would slow down the time it takes for them to have access to those funds because they’ll be waiting for a check to arrive in the mail instead of the funds being direct deposited in their bank account. Meanwhile, less than 60% have direct deposit set up with the IRS.
- Nearly all consumers we surveyed (85%) think the government’s plan is a good idea. The intention of the stimulus checks is to help counter the negative financial and economic impacts of coronavirus.
How Consumers Will Spend Stimulus Checks
- Groceries: 44.5%
- Pay Bills: 42.6%
- Pay Rent/Mortgage: 28.5%
- Put Some in Savings: 26.0%
- Put All in Savings: 17.6%
- Pay Credit Card Debt: 15.2%
- Pay Off Other Debt: 7.0%
- Unsure: 6.2%
- Donate Some to Charity: 4.3%
- Splurge: 4.0%
- Pay Off Student Debt: 3.6%
- Donate all to Charity: 2.3%
- Post-Pandemic Vacation: 2.2%
The survey also revealed that households with lower incomes were, for the most part, more likely to use their relief checks to pay for necessities, such as groceries, bills or housing costs. Meanwhile, we found that 7% of households that make $100,000 or more annually plan to donate their entire relief check to charity or someone in need.
Stimulus Check as a Necessity
Overall, our survey revealed that the relief checks are much needed, with 69% of survey respondents saying that they personally need the financial assistance. That’s in comparison to 26% of respondents who said that they don’t really need the check but that it will help and just 6% who say they don’t need it at all.
Across all generations, the overwhelming majority of respondents said they indeed needed the relief payment. However, Gen Zers were far more likely to say that they didn’t need the relief check (10%) compared to millennials, Gen X and baby boomers. One possible explanation for this could be that Gen Zers could have parents or other older adults supporting them financially. Not surprisingly, our survey also found that households with less than $25,000 in annual income were far more likely to say they needed the relief check (80%), compared to 50% of households that make $100,000 or more.
What Consumers Should do with Stimulus Check
Matt Schulz, the chief credit analyst for LendingTree, acknowledges there is no one-size-fits-all answer when it comes to how people should use their stimulus checks, but says it’s important to carefully plan what you do with it.
“If you can put some of the check away to start an emergency fund or build up your current one, that’s probably ideal,” Schulz said. “That’s not reality for millions of Americans, though. For many, this will be about keeping the lights on or putting food on the table. That’s why these checks are so, so important.”
If you’re focused on using your check to demolish debt, Schulz emphasizes the importance of having an emergency fund in place as well. “It’s obviously great to pay down debt, but far too often, people pay off debt and have no savings at all,” Schulz said. “That means that if an unexpected expense comes up, that cost goes right back on the credit card and the person is right back in debt. Having even a little bit of cash in savings can help avoid that situation.”
If you’re on good financial footing, Schulz points out a few smart ways to use that money, including:
- Growing your rainy-day fund
- Paying off credit card debt
- Bulking up your retirement savings
- Supporting your community by spending on small businesses or nonprofits
To view the full report, visit https://www.magnifymoney.com/blog/news/how-consumers-will-spend-coronavirus-stimulus-money/
MagnifyMoney conducted an online survey of 1,038 Americans, with the sample base proportioned to represent the overall population. The survey was fielded through Qualtrics from March 26 – 27, 2020.
MagnifyMoney.com, a subsidiary of LendingTree, makes it easy for consumers to shop for the best financial products and get answers to their most important financial questions. MagnifyMoney’s unbiased advice and comprehensive product database helps millions of people compare credit cards, loans, checking accounts and savings accounts. MagnifyMoney’s newsroom of personal finance experts is dedicated to helping people save money and lead financially healthier lives through strategies and tips for avoiding fees, getting out of debt, paying off student loans, avoiding consumer scams and other financial topics. MagnifyMoney was launched in 2014, was acquired by LendingTree in 2017, and is based in New York, NY. For more information, please visit www.magnifymoney.com.