In the face of the coronavirus pandemic, many Americans are dealing with furlough, unemployment, reduced pay or climbing health care costs. To offer support, Congress has passed a historic $2 trillion relief package that includes direct payments for eligible 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. 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 Americansâ€™ finances.
Our survey found that the stimulus checks, being distributed as part of the coronavirus relief package, are acting as a safety net for many Americans. When we asked respondents what they plan to spend their stimulus check on (they could select all answers that applied), the top two answers were to pay for groceries (45%) and to pay for bills (43%).
Meanwhile, we found that 29% of respondents plan to use their check to make their rent or mortgage payment, 26% are going to put some of it in savings and 18% plan to put all of the money in savings.
When looking at how different generations intend to spend their relief checks, we found that millennials were more likely than any other generation to say that they plan to use their relief check to pay for bills (49%) and to pay their rent or mortgage (37%). Understandably, the youngest generation â€” Gen Z â€” was the age group most likely to plan to use their relief check to pay off student loans (11%). They were also the generation most likely to put either all of their check in savings (21%) or most of it (39%).
Our 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.
Overall, our survey revealed that the relief checks are much needed, with 69% of survey respondents saying that they personally need the financial assistance. Thatâ€™s in comparison to 26% of respondents who said that they donâ€™t really need the check but that it will help and just 6% who say they donâ€™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 didnâ€™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.
Of survey respondents who said they did not need the relief check, nearly half (45%) said they still do not feel guilty about receiving one. However, 10% of those who said they do not need the check admitted to feeling guilt over receiving the check and plan to donate it. Another 10% that feel guilty, though they still intend to use their check. Meanwhile, 35% of respondents who said they donâ€™t need a check donâ€™t expect to receive one â€” which are likely people who make too much money to qualify.
While Congress moved swiftly to provide relief to families facing financial turbulence, our survey found that many Americans (39%) do not think the checks are enough. The checks are for up to $1,200 per eligible adult and up to $2,400 for couples filing joint returns, with an additional $500 per child under the age of 17.
Though many are dissatisfied with the amount of the checks, 41% of Americans think that the amount of the stimulus checks is just right. Another 4% even said that the amount is too much.
As for the income thresholds that apply to the relief checks â€” which start at $75,000 for individuals and $150,000 for jointly filing married couples â€” nearly half (49%) of survey respondents said that they agree with the U.S. governmentâ€™s decision to implement income thresholds as well as with the income limits they chose. Another 21% agreed that there should be income limits but thought those limits should be lower, while 9% thought the limits should be higher. In contrast, 11% said that there should not be an income limit at all.
As a glimmer of good news, our survey found that the majority of respondents (74%) said that the relief checks will help relieve either some or all of the difficulties theyâ€™ve been facing as a result of the coronavirus pandemic. However, 10% of respondents said they will still be facing a significant level of financial difficulty despite the relief check.
On March 30, the IRS announced that payments will be disbursed within the next three weeks. Those who chose to receive their tax refund via direct deposit, as opposed to mailed checks, can expect to receive their relief check faster.
If you did not share your bank account information with the IRS when filing your taxes, the Department of the Treasury plans to open an online portal that will allow you to share your direct deposit information with the IRS, enabling you to get your relief check faster.
While our surveyâ€™s findings revealed that many taxpayers already plan to spend their stimulus checks on necessities like bills and groceries, some might feel uncertain about how to prioritize competing financial needs. 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 itâ€™s important to carefully plan what you do with it.
â€śIf you can put some of the check away to start an emergency fund or build up your current one, thatâ€™s probably ideal,â€ť Schulz said. â€śThatâ€™s not reality for millions of Americans, though. For many, this will be about keeping the lights on or putting food on the table. Thatâ€™s why these checks are so, so important.â€ť
If youâ€™re focused on using your check to demolish debt, Schulz emphasizes the importance of having an emergency fund in place as well. â€śItâ€™s obviously great to pay down debt, but far too often, people pay off debt and have no savings at all,â€ť Schulz said. â€śThat 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.â€ť
If youâ€™re on good financial footing, Schulz points out a number of good uses for that money, including:
MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,038 Americans, with the sample base proportioned to represent the overall population. We defined generations as the following ages in 2020:
The survey was fielded March 26-27, 2020.