Survey Reveals How Consumers Will Spend Stimulus Money: Groceries, Bills and Savings Top the List

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 Americans’ finances.

Key findings

• We asked consumers how they’ll 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.
• While many said the check will help, they aren’t necessarily certain it will be enough. 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 Americans are spending their stimulus checks

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.

Generational and income-level differences in stimulus check spending

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 — Gen Z — 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.

Americans that need stimulus checks the most

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.

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 don’t need a check don’t expect to receive one — which are likely people who make too much money to qualify.

Do Americans think the stimulus checks are enough?

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 — which start at $75,000 for individuals and $150,000 for jointly filing married couples — nearly half (49%) of survey respondents said that they agree with the U.S. government’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 they’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.

When will the stimulus checks go out?

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.

What you should do with your stimulus check

While our survey’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 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 number of good uses for 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

Methodology

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:

• Gen Z: 18 to 23
• Millennials: 24 to 39
• Gen X: 40 to 54
• Baby boomers: 55 to 74
• Silent generation: 75 and older

The survey was fielded March 26-27, 2020.