Millions of Americans either have or are about to receive $1,400 as part of the American Rescue Plan. Everyone with an income below a certain threshold is eligible to receive the final of three stimulus payments.
The money will mean a lot of extra spring spending, especially for parents. Families with kids are getting the biggest financial boost, with an additional $1,400 for each dependent child. This round of stimulus is aimed more at lower earners than last year’s payments, meaning more people will cash those checks immediately and put them to good use.
How will they spend it? People who need it the most say debt reduction and household expenses are their top priorities.
2020 Stimulus Spending
If history repeats itself, then maybe the first round of checks can give us a hint of what’s to come. People who spent previous stimulus money said they used it for a broad variety of expenses. Here’s how Americans spent their first twelve hundred dollars of stimulus a year ago:
- Food (80 percent)
- Bills such as rent, mortgage, and utilities, including gas, electricity, cable, internet, and cell phone (77.9 percent)
- Household supplies and personal care products (2 percent)
- Clothing (20.5 percent)
- Either spent, or planned to, on TVs, electronics, furniture, appliances, fitness equipment, toys, games, and other household goods (8.1 percent)
Bills, Bills, Bills
It’s been a long, lean year for many cash-hungry folks. Maybe you’re among the many people who had to put off paying bills in order to cover salary or lost wages. Millions of Americans currently struggle to pay for their utilities. Fortunately, they will have some extra cash to settle medical bills, cover rent, or stave off a utility shutoff.
Previous stimulus payments were clearly essential for many people to be able to afford basic necessities like housing and food. Even though the economy is now recovering, many families need this injection of cash even more than before. Within three weeks of receiving their $600 stimulus checks, low- and middle-income households had already spent a large portion of the funds. A similar trend happened last April, as well.
Basic Living Expenses
Suffice it to say, for most recipients, the money couldn’t come soon enough. The payments will allow many lower-income Americans to continue paying their bills well into the summer. A $1,400 check is reportedly enough for some 22.6 million adults to cover their expenses for at least four and a half months, providing they still have a stream of income coming in.
Since the economy isn’t fully open, it will also be spent on the few things we’re still able to do, from pharmacy items to grocery stores and take-out.
What about that $600 Check?
The money from those smaller checks earlier this year also went quickly. Here’s how people planned to spend it, from highest to lowest priority:
- Food
- Debt
- Utilities, including cell phone and Internet bills
- Household supplies
- Rent
- Day-to-day items
Many Will Pay Down Debt
Countless people will be putting the money toward credit card balances, car loans, and student loans. A quarter of stimulus recipients last year planned to use the money to pay down debt. Considering the year we just had, it’s no wonder that debt payment is a bigger issue than ever. Not to mention that debt collectors will have access to the money this time. However, the money can’t be seized to pay back taxes, child support, or certain government debts.
Most Americans struggle with their debt obligations. The checks they’re receiving will be a big help to those who have been especially burdened with the stress of debt. It might not pay off all of it, but you can use the extra cash to make minimum payments and, possibly, pay off your smallest debts. By doing so, the money can also help people avoid accruing more debt over time.
As for what else you can do, Community Financial Service Centers offer countless services for getting that money where it needs to go. To name a few:
- Money transfer to pay a friend back
- Guarantee a payment with a money order
- Add it to your prepaid debit card
- Pay your bills electronically
Here at CFSC, we can help you get fast access to your stimulus check with our check cashing services. No holds, no waits; just immediate cash in hand! Check us out online, stop by, or call your nearest CFSC for the details on how we can help.