Question of the Day: Rank order (from highest to lowest) how consumers plan to use stimulus payments received in March 2021: Spent it, Paid down debt, Saved It?

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Apr 07, 2021
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Question of the Day, Savings

Answer: 

Questions:

  • Consumers received three stimulus payments over the past year. How much of a difference is there in how they used the payments?
  • Consumers saved a significant amount of all three stimulus payments. What do you think they are saving for?
  • What would you do if you received $1,400 now?

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Behind the numbers (NY Fed survey):

Similar to the second round of stimulus, household heads without a college degree plan to use more of the stimulus for paying down debt and less for consumption. Those without a college degree expect allocating 37 percent toward debt while those with a college degree planned to use 27 percent for that purpose. Comparing respondents with household incomes below $40,000, between $40,000 and $75,000, and above $75,000, we find a monotonically decreasing share used toward paying down debt, and higher-income households, on average, tending to save more.

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About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.