Buzz
If you're currently unemployed or working fewer hours because of the pandemic, your government relief check, which might arrive as soon as this week, is likely a helpful addition to your finances.
However, many of you with steady jobs are puzzled about why you're receiving a check in the first place—or what you're supposed to do with it.
Stimulus checks are meant to support the economy during times of high unemployment and low income, when consumer spending is at a decline. Ideally, the American consumer uses their payment to buy essentials like groceries, pay daycare bills, or perhaps enjoy a dinner out or a movie. The money circulates back into the economy, helping keep the system running.
This time, things are different. Stores are shut down. Vacation plans are indefinitely postponed. You can’t even take a quick drive to visit family.
When I suggested your best choices for using your coronavirus relief check, like 1) paying bills or 2) saving it, many of you reacted as if I had six eyes and had never looked at money before. "It’s meant to be spent!" "Holding onto it does nothing for the economy!" some of you said. Others felt it was their responsibility to pass the money on to underpaid essential workers, your hairstylists, or dog walkers, whose services you can’t use at the moment.
I get it. I completely understand the impulse to spend the money immediately or give it to those who may need it more.
However, if you haven’t already reserved your relief check for essential household and family expenses, I urge you to reconsider saving it. I’m not against having fun or helping others. The reason I’m stressing the importance of saving right now is that there’s still so much we don’t know.
Looking at initial unemployment claims over the last two decades, the recession seems like a minor blip compared to the drastic changes we’ve seen in just the last month.
We have no idea when that number will reach its highest point.
A survey by consumer research company Piplsay, which included 20,000 Americans, revealed that 67% are concerned about potential pay cuts or losing their jobs because of the coronavirus crisis. Nearly half of the respondents said their employers hadn’t clarified whether they would receive two weeks of paid sick leave if they need to quarantine due to the virus or symptoms.
No matter how well you’ve managed to avoid touching your face, staying away from crowded places, and isolating at home, the coronavirus curve has yet to show signs of flattening.
If you don’t urgently need your $1,200 right now, the sensible choice is to hold onto it. Because there’s no precedent for understanding how this pandemic will affect our lives, not just in the short term, but in the medium or long term as well.
A March 31 survey by Bankrate revealed that 47% of individuals had intentionally reduced their spending due to economic concerns. This survey was conducted before unemployment numbers surged. Before the U.S. became the epicenter of coronavirus cases.
And while financial institutions and service providers are currently offering payment relief and waiving late fees, there’s no certainty about how long these accommodations will last. Just as there’s no certainty that your relief check will arrive as expected, or that you’ll be able to navigate your state’s unemployment system to start receiving benefits, or that your student loans will remain in forbearance after six months.
Yes, one day you might be able to buy that new TV, have your favorite restaurant deliver a meal, or even give your beloved gig workers a 100% tip. But right now, the uncertainty surrounding us makes it hard to feel excited about your relief payment.
These are not ordinary economic times where the economy simply needs a boost. This money is a true lifeline, and you might not yet realize how crucial it is for you.
