Stimulus Package: Part Two
Since the first economic stimulus package was presented in March, there have been discussions about additional financial relief for American consumers. In April, I posted many of the reasons why some people did not receive their direct payment and how to avoid scammers. With a second stimulus package (likely) on the horizon, it is important to revisit this.
The HEROES Act, introduced in May, was passed by the House and is currently being negotiated in the Senate. The renewed discussions about this bill and its proposed direct payments would be a relief to those struggling to stay afloat amid the COVID-19 crisis. During the first wave of direct payments, 29% of the recipients spent their money, 36% saved their money, and 35% paid debts.
Remember, this was early in the pandemic, and many people were receiving an additional $600 in unemployment benefits. 73% of the funds from the enhanced unemployment benefits were spent on essential or debt repayment.
It’s been six months since the first stimulus payments hit bank accounts, and while a lot has changed, some things remain the same – or are even worse. The coronavirus is still here and likely will remain through next summer (or longer.) Many businesses continue to suffer. Employees are finding themselves in a tough spot financially. Ultimately, this means that people need some help and are anxiously awaiting another round of deposits.
If you are unemployed or working fewer hours and receiving less in your paycheck, you may need the extra money for critical things – food, housing, electricity, etc. If your needs are covered, consider padding your emergency savings. Remember, “emergency” funds are different than your normal savings.
If you are still working and/or receiving the same income, you might not be in dire need of extra money to cover necessities. In this case, ask yourself if you have $1,000 set aside for an emergency? If the answer is ‘no’, you can deposit the money into that account. If you do have $1,000, then you can add the money to your savings account for a rainy day.
One thing is true - you should ALWAYS update your budget to reflect your current financial needs. If money is tight, you can re-prioritize your spending. List your most important bills first and then make a plan to ensure that they are paid. It goes without saying that now is the time to cut back on unnecessary purchases because every penny counts. We don’t know if things will continue to get worse.
We may not have an answer about direct payments until after November 3rd, but whenever it happens, please be sure to play it safe and stay smart!
NEVER pay a fee to receive a stimulus check. The IRS will automatically send payments to all eligible individuals.
NEVER divulge personally identifiable information to any individual who claims to be from the IRS. The IRS will NOT call, email, or text you for your information. Likewise, they will not contact you on social media for any reason.
NEVER let anyone into your home who claims to be testing you or your home for COVID-19. There will never be a legitimate reason for anyone to enter your home to test you or your surroundings for the virus.
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Krista Kyte is a personal finance blogger and personal banker with over 18 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help consumers reach and maintain financial security, and start living the life they’ve always wanted.
