Stimulus Check Update: Wonder How Your Neighbors Are Spending? We Have an Idea

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How we're spending our stimulus checks has a lot to do with how we were personally impacted by COVID-19.

A study released earlier this month by the New York Federal Reserve breaks down how we -- and our neighbors -- are spending American Rescue Plan funds. Here, we'll peek into the study and try to parse out why we may be spending our direct stimulus payments the way we are.

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Tucking it away

According to the Fed's study, about 41.6% of us are slipping our stimulus funds into a savings account, just in case. Given the shocking year directly in our rearview mirrors, this should not come as too big of a surprise.

What if someone had warned you on New Year's Eve 2020 that there was a virus spreading across the globe that would shutter businesses and cripple economies? What would you have done if you'd known there was trouble on the horizon? You would likely have looked to see how much cash you had in reserves, and if there weren't enough, you would have saved more.

Perhaps the fact that so few of us considered a global pandemic a realistic concern has left us shaken and helps explain why so many feel compelled to hoard extra funds when they come our way.

Chipping away at debt

Approximately 33.7% of us are using our direct stimulus payments to pay down debt. It's not fun or exciting, but we feel better knowing that we did something responsible with the funds.

Another thing that should not come as a surprise is the number of Americans who were forced into debt. Consider how quickly it all went down:

  • Jan. 21, 2020: Officials recognized the first case of COVID-19 on U.S. soil.
  • Feb. 10, 2020: President Donald Trump promised a crowd gathered for a political rally in New Hampshire that the virus would "miraculously" go away by April.
  • Mid-April, 2020: The Labor Department reported that more than 22 million Americans had lost their jobs due to COVID-19.

For those who found themselves unemployed, it may have been personal loans and credit cards that allowed them to keep food on the table. Today, it appears that many (at least 33.7%) are committed to using stimulus funds to chip away at that debt.

Interestingly, the Fed study found that 37% of respondents without college degrees planned to use their stimulus check to pay down debt, while only 27% of respondents with a college degree intended to do the same.


Find yourself wondering about that new trampoline in your neighbor's yard? They could be among the 24.7% of Americans spending their stimulus checks on non essentials. For those Americans in the enviable position of having bills paid and enough in savings, non-essential purchases can be a mood-lifter after a year of bad news.

Still, the Federal Reserve study showed that only 8% are buying non-essential items -- which makes your neighbors pretty unique.

We're predictable

As of today, more than 25% of all American adults have been fully vaccinated against COVID-19, a fact that one might imagine would change the way we use stimulus funds. According to researchers, though, the percentage of Americans who saved, paid down debt, and spent their stimulus checks has changed very little from check to check.

Researchers don't seem worried. In fact, they believe that the sudden increase in savings will eventually fuel spending. As uncertainty diminishes, more people are vaccinated, and businesses fully open, the savings dam will break, and consumers will begin to feel confident about parting ways with their money.

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