[ad_1]
Michele Schneider, Editor-in-Chief of MarketGauge Group, Scott Martin, CIO of Kingsview Wealth Management, and Nicole Webb, Senior Vice President of Wealth Enhancement Group, on their market outlook.
Stimulus payments have been a pandemic lifeline for many Americans. For some young adults, they offered the possibility of building up savings or paying off their debts.
Most adults who reported receiving the second stimulus check, issued around the new year, used them to pay for household expenses, including utilities and telecommunications payments, according to recent data from the U.S. Census.
STIMULATE MONEY MISSING? HOW TO CLAIM PAYMENT ON YOUR 2020 TAX DECLARATION
The uses of stimulus payments varied by age group. About 54% of people aged 25 to 39 said in the census survey that they mainly used the stimulus money to pay off their debt, and 26% said they mainly saved it from 6 to January 18. By comparison, about 57% of people aged 40 to 54 said they mostly paid off their debt and 22% said they mostly saved it.
Some are wondering what to do with the $ 600, given the uncertainty surrounding the economy, the pandemic and the possibility of further stimulus.
“If you can’t expect what’s going to happen in the next couple of months, you have no incentive to spend it,” said Cameron Turner, 23, who lives in Berkeley, Calif. While Ms. Turner remained employed her job in public relations, she decided to put the check in her Rainy Day savings account.
With an unemployment rate of 6.3%, many Americans remain concerned about financial security. Last week, 779,000 workers applied for unemployment benefits, according to the Ministry of Labor.
Typically, up to half of stimulus checks are spent on average by people, said Jonathan Parker, a professor at the MIT Sloan School of Management who has studied the use of economic impact payments during economic downturns. 2001 and 2008. While it’s too early to draw demographic distinctions in the use of 2021 checks, he said this time around it was definitely different.
“The ability to consume has stopped in many dimensions. So there are a bunch of people going out to restaurants and entertainment and spending a lot of money on bars and it just disappeared. Mr. Parker said. “Other than your streaming service, you don’t go out and spend a lot of money.”
For the first stimulus payment distributed in spring 2020, nearly 60% of those who received or expected to receive a payment said they plan to spend the check on expenses. Debt repayment was the second most reported use, at 13%, by census survey respondents in June 2020.
Credit scores continued to improve and credit card debt fell for the first time in eight years, according to Experian. The credit reporting company said consumer credit card debt was down 14% in 2020. The average credit card debt held by millennials fell 11%.
Experian also reported that people reduced their credit usage and delinquencies in 2020.
Some say they feel pressured to reduce their financial obligations.
Ruth Estrella, 28, who hasn’t had a stable job since May, put the $ 600 on her credit card with the lowest balance. In doing so, she said she felt she was making progress in paying off her debt.
“It’s something, but it’s nothing,” she said.
Even for some people who spent their first stimulus check, the second sometimes went to paying down debt or saving.
For Kate Sumser, a law student who lives in San Francisco with her partner, using the stimulus check to save money or get into debt was not an option. Their first stimulus check went to rent, groceries and bills. The couple are counting on their student loans to make ends meet.
When they received their second stimulus checks earlier this year, they knew immediately that the money would be used to pay off their credit cards.
“The ideal would have been to save him,” she said. “But there was no choice.”
Ms Sumser is hoping for a new wave of recovery. But until the pandemic is brought under control, she expects to take on more and more debt.
Meanwhile, the amount of money people put into savings accounts continues to increase. An analysis by the Federal Reserve Bank of New York found that consumers saved more than a third of the first stimulus checks.
GET FOX BUSINESS ON THE ROAD BY CLICKING HERE
The mood has changed markedly since last April, said Matthew Tarka, a recent graduate who works in finance. He was willing to spend some of his initial stimulus check on a plane ticket to see his parents last spring. Still, he said the length of the pandemic had caused him and his friends to think differently about this payment.
“I think this time around people are probably saving a little more because I know a lot of people who have been out of work since the last stimulus check,” he said. “I see my friends are a little more frugal with this.”
[ad_2]
Source link