Thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, millions of Americans have received stimulus payments from the federal government.
These payments, worth as much as $1,200 for each adult and $500 for each qualifying dependent, were meant to help blunt the impact of the financial devastation the great lockdown caused. But they've fallen short. Although there are multiple legislative proposals on the table to provide more funding, it's far from certain a second check will come.
As politicians ponder what to do, the data on how Americans spent their COVID-19 money shows exactly why more financial assistance could be needed by many.
Americans spent their money on the essentials
According to a YouGov poll, most Americans who received stimulus money used it to address immediate -- and important -- financial needs:
- 30% of people paid bills with the funds.
- 10% purchased essentials, such as food or hygiene products.
- 14% put the money into an emergency fund.
By comparison, just 13% of Americans used the money toward long-term goals, such as saving for retirement, paying off debt, investing in the stock market, or saving for a home. And even fewer people (3%) were able to buy non-essential items with it.
Sadly, for all those Americans who used their checks to cover immediate financial demands, the money is gone but the need still remains. For the typical American family, their check replaced only 6.2 days worth of lost income and covered less than half a month of spending. COVID-19 has already affected their finances for far longer.
While the unemployment rate dropped in May, it is still extremely high, and the country has officially entered a recession. The future still doesn't look great for millions who may be without emergency savings and whose stimulus money has been spent.
What to do if more stimulus money doesn't come
While there's clearly a need for additional stimulus funds, there's no guarantee more money will come even as the country officially enters a recession. And if it doesn't, families who have spent their check may find it hard to make ends meet. To help do that, make sure you take advantage of other benefits in the CARES Act, such as expanded unemployment benefits.
Finding ways to cut your budget by eliminating non-essentials can also help you through tough times, as can talking with creditors who may be willing to work out a payment plan. By being proactive, hopefully you can find solutions to see you through unless or until the government gets more money into your pocket.