Americans largely used the first stimulus check to pay down debt and save — here's how they'd use a second

How Americans say they would use a second stimulus check, should they receive one.


When Americans started getting $1,200 stimulus checks in March as part of the CARES Act, many chose to use the money wisely by covering essentials and paying down debt. If a second round of relief payments were to come at some point, they would make that choice again.

That's according to the New York Federal Reserve's Survey of Consumer Expectations, which polled 1,300 heads of households in the United States between June 10 and 30, and again between August 6 and 21, on their financial priorities during the coronavirus pandemic.

Almost half, 45%, of the respondents say they would put the extra money toward their savings. Another 31% would use it to pay debt such as student loans, credit cards, and mortgages. And about a quarter, 24%, would spend the funds on food, housing, and other necessities.

Those figures roughly line up with the way the survey respondents actually used their first stimulus.

"Americans are typically overleveraged with debt, so it's unsurprising that one-third of stimulus money went to pay down debt, which frees up additional cash for necessities, and one-third went to savings," Lou Abrams, CFP, the founder of financial start-up Fisecal, tells Grow. "Most of my freelancing clients paid off significant portions of credit card and student loan debt using the CARES Act as cash flow rather than dip into savings or take money from their paycheck."

Many Americans still need financial help

While the status of a second stimulus payment isn't clear, it's easy to see why Americans need the cash: Since the virus was declared a pandemic, up to 46 million U.S. adults have wiped out their emergency savings. A third of the 2,500 millennials polled in a Bank of America survey say their financial situation has gotten worse in the past six months. And 751,000 Americans filed for unemployment for the first time the week ending October 24.

Meanwhile, the recession has been particularly hard on women and working parents. When restaurants and other businesses shut down in March, so did schools and day cares, leaving many women no choice but to step away from the workforce to focus on household labor and child care.

Even before the pandemic, among married couples who both work full time, women provided almost 60% of child care, according to a recent Northwestern study. From February to April, according to the Bureau of Labor Statistics, more than 13 million jobs held by women disappeared.

How to spend a stimulus check if you're employed

Video by Jason Armesto

Status of a second stimulus check

House Speaker Nancy Pelosi has been advocating for the Senate to vote on the House-approved $2.2 trillion bill. Treasury Secretary Steven Mnuchin wants no more than $1.8 trillion, though. The House voted down a "skinny" bill worth an estimated $500 billion in late October, as it did not include provisions for individual $1,200 stimulus checks or state aid. 

The Senate, House of Representatives, and White House have each given their own timelines on potential relief, but the Senate is currently recessed until November 9, after the election.

Find ways to boost your income

If your financial situation needs a boost now, you don't have to wait for potential stimulus.

Take a look at your spending and find out where your money is going. Call your credit card company and cellphone provider to see if you can land a better rate and cancel any streaming subscriptions or other services you're registered for but may no longer use.

How to spend a stimulus check if you're unemployed

Video by Jason Armesto

Also, look to see if you're eligible for a reduction in housing payments since many local and state governments offer local emergency assistance programs and temporary measures that protect renters. Homeowners with federally backed loans could also be eligible for a six-month deferral or temporary reduction on payments while they get back on their feet.

Picking up a side hustle could also help your bottom line. According to a recent Acorns poll, about a third of workers, 34%, say they have a side hustle outside their normal job to prepare for an unexpected expense or loss of income, and another 19% want to start one. Stash a portion of extra income in a high-yield savings account, which offers compound interest and allows your money to grow.

"Obviously, this differs based on an individual's specific financial circumstances and goals, but paying yourself first should always be a top priority," Adam Murray, CFP, a financial advisor at Berman McAleer, tells Grow. "Whether that means paying down high-interest debt, such as credit cards or student loans, or increasing an emergency fund or retirement savings, by focusing on improving your financial health you are helping yourself now and in the future."

More from Grow: