Stimulus Checks Spendings; How People Used The Money.

$850 Billion in Stimulus Checks.

A total of over $850 billion has been sent out in stimulus checks since 2020 to help Americans weather the impact of the pandemic. The third round of the stimulus checks went out beginning on March 12; the amount of $1400 was sent to Americans. 2020 has gone, 2021 is winding up and we just want to know what these stimulus checks are spent on. What are people doing, what are they buying, how has the money been used by Americans.

Spending Statistics

According to the U.S. Census Bureau’s survey fielded in July 2020, the survey shows that how Americans spent the stimulus checks depends on their income. 87.6% of people making $25,000 used their stimulus payments to meet expenses, while those earning between $75,000 and $99,999 annually were more likely to pay off debts or contribute to their savings with the first round of the stimulus check. It came around April 2020 and the unemployment rate was as high as 14.7%.

Expert Analysis by Julie Ramhold

A consumer analyst at DealNews, Julie Ramhold found out that stimulus checks did not go into wasteful or extravagant spending but rather went into making ends meet and savings.

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These are what Americans spent on or rather how the money was spent.

According to Ramhold, these checks were spent inn3 categories. The first category is the Groceries, Rent, and Bills. The next category is those who spent their money Paying Down Debts and the Last category are those of used their checks to boost saving. Here is what Julie Ramhold has to say about these 3 categories.

1. Groceries, Rent, and Bills

“Not surprisingly, stimulus checks went a long way towards helping some consumers pay their bills or buy groceries, for many Americans, once the pandemic hit, they were furloughed at their jobs or straight up just laid off so these checks helped them get by until they could find another long-term solution,” Ramhold said.

2. Paying Down Debt

“Other consumers used their stimulus checks to try to pay down debt, especially if they were in a financially stable situation and still held onto their jobs. The money was an unexpected bonus so it’s not too surprising that consumers who are saddled with debt from credit cards, student loans, and other things jumped at the opportunity to pay that down. Even if they’re regularly paying on the debt, having a sudden influx of cash they weren’t counting on provided a good chance to put more towards it, which should result in them being able to pay it off sooner.” Ramhold said.

3. Boosting Savings

“Other consumers took that unexpected check and put it towards boosting their savings, especially when it came to the second and third checks. By then they may have found a more stable situation and could use the funds for other things besides paying for monthly bills or household necessities, so many put it into savings. And if those same consumers had to dip into their savings earlier due to the pandemic, then this offered a chance for them to return it to pre-pandemic levels — or at least get close to replenishing it.” Ramhold said.

What Other Experts think.

R.J. Weiss, a CFP® and founder of the personal finance site The Ways to Wealth believes that the stimulus will make their perceived wealth increase; making them spend as though they are wealthy when in the real sense their income is the same. He explained this using the wealth effect.

“Bad financial habits can develop, such as spending more impulsively, and while short-term they wouldn’t notice their impact, long-term they may find themselves in worse trouble,” Weiss said.

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Another expert Jeff Galak, associate professor of marketing at Carnegie Mellon University’s Tepper School of Business, described stimulus funds as “windfalls,” meaning they are not part of the typical monthly income. He believes that while one might have a good budget for monthly paychecks, windfalls like stimulus checks are often mentally budgeted and tends to go into buying things that may not be immediately needed like New TVs, new clothing.

Galak said “And, to be clear, so long as those fundamental needs are met, there’s absolutely nothing wrong with spending a stimulus check on something fun. The trouble creeps in when there is a need that isn’t first addressed, like high-interest credit card debt, student loan payments or back rent.”

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