The coronavirus $2 trillion relief package aimed at helping Americans make ends meet while the economy is virtually shut down moved through Congress quickly. But new statistics show a sizable portion of people will need more money to stay afloat.
A survey conducted by Bankrate reveals that out of the 67 percent of Americans who anticipate receiving a stimulus payment, 31 percent say the check “won’t sustain their financial well-being for even a month.”
Eight percent of the 31 percent said the money “won’t be enough to help them at all” to cover their expenses.
“This payment will not be a financial panacea, but it is sorely needed by millions,” says Greg McBride, Bankrate’s chief financial analyst. “For those already suffering from income disruptions, the payment will be needed for day-to-day essentials and monthly obligations.”
The survey also found that about 17 percent of Americans do not know if they are eligible or if they will receive a check.
Despite the perceptions that the check won’t be enough, most Americans consider the checks to be “very important,” regardless of their income bracket.
For those who net less than $30,000 annually, the government stimulus checks appear crucial, with a 69 percent majority of this demographic seeing it as “very important.” This figure tends to decline as the income brackets increase, yet a plurality of respondents ultimately regard the checks as “very important” to sustain the financial well being of many American workers.
Yet nearly one-third, or 33 percent, of Americans note that the stimulus checks won’t bridge their financial needs for even a month.
When researchers asked “Given the addition of this stimulus money, how long do you think it will allow you to sustain your financial well-being?” a plurality of survey respondents — 32 percent — estimated that the checks would last somewhere between one month to less than three months.
The second most prevalent answer was that the checks would last them less than one month, with 23 percent saying they would need more money to support their financial health.
Bankrate notes that the higher the annual income, the less confidence a respondent has in how far the money will go to sustain their financial well being.
Regarding where this money will go, a staggering 50 percent say it will be used to pay monthly bills, such as rent and water. Another 41 percent said the money will be spent on daily essentials.
This comes as approximnately 33 percent, or almost one third, of U.S. renters couldn’t pay their rent on time due to coronavirus-related business closures.
Across income brackets, individuals earning between $50,000 and $79,000 are more likely to use the money to boost savings. Bankrate notes that while this is a financially sound decision, it “could potentially challenge the checks’ economic purpose” of spending it in some form to boost the economy during the coronavirus pandemic.
Financial planners recommend using savings and the forthcoming stimulus check to pay bills and pay down debt if one anticipates job loss, per Bankrate. Corbin Blackwell, a certified financial planner (CFP) at Betterment said that outside of paying immediate bills and crucial living expenses, adding the money to savings for future emergency use is a good idea.
“Even for folks who are a little uncertain but haven’t lost their jobs, they might want to beef up their checking account for three to five weeks, maybe two months, depending on how conservative or uncertain they feel,” Blackwell told the report authors.
The economy is currently paused to stop the spread of the deadly coronavirus, which, while preserving public health, has catapulted the previously booming U.S. economy into a recession.
Speaking on NBC, Jerome Powell, chair of the Federal Reserve, said that this is a situation where economic activity has to temporarily stop.
“In principle, if we get the virus threat under control fairly quickly, economic activity can resume,” Powell said.