This is how renters are really using their stimulus checks

On Dec. 27. 2020, President Donald Trump signed a second COVID relief bill into law. The $900 billion economic stimulus package included $600 stimulus checks for U.S. taxpayers. The hope was that individuals would energize the economy by spending the stimulus payment.

But exactly how individuals used their $600 stimulus payment (which arrived as a direct deposit, paper check or debit card) varied widely. Apartment Guide surveyed more than 1,000 individuals across the country to learn how renters are using their stimulus checks.

Some spent their stimulus checks. Others saved them. Their financial situation and their household's needs shaped their choices.

Who received stimulus checks?

U.S. citizens and individuals with a valid identification number listed on their 2019 tax return were eligible for a stimulus check. Individuals with an adjusted gross income of up to $75,000 a year on their 2019 tax returns received a $600 stimulus payment. The payment was the same for taxpayers filing as the head of their household and earning up to $112,500. A couple earning up to $150,000 annually received a $1,200 stimulus payment.

There was also a $600 payment for each child in the household. Individuals making more than this dollar amount received a prorated dollar amount on a sliding scale.

How renters really spent their stimulus checks

The government hoped that individuals would spend their stimulus checks on consumable products and services to boost the economy. But the renters we surveyed showed very different priorities. Although the majority did elect to spend their stimulus checks, most focused on necessities.

The highest percentage of respondents (19.96 percent) indicated that they would put their stimulus check toward rent. The second most popular use of a stimulus check (18.29 percent) was to pay for utilities. This category can include water or electricity bills that aren't included in rent, as well as cell phones or internet.

Another 12.64 percent of respondents indicated they planned to spend their check on food or groceries. That number includes food from restaurants. This category experienced significant losses in 2020, since the pandemic has reduced or eliminated indoor dining capacity.

In contrast, other struggling retail and hospitality sectors scarcely registered with respondents. Only a tiny percentage opted to spend their stimulus checks on travel (1.33 percent), clothing (2.22 percent) and entertainment (1.22 percent) barely made it on the board.

Not everyone opted to spend their money on new purchases. Of our respondents, 14.63 percent indicated they'd save the money. Another 12.42 percent planned to pay credit card bills.

As we'll learn by digging into the numbers, not everyone spent their stimulus check the same way. Whether a respondent experienced financial difficulties in 2020 affected how they used their stimulus check.

Financial hardship influences stimulus check spending

The pandemic caused unprecedented financial challenges. Unemployment hit its highest mark since record-keeping began in 1948. Americans lost wages due to furloughs, temporary or permanent business closures, or a lack of childcare option. First-time unemployment claims rose by 885,000 for the week ending Dec. 12, the largest weekly increase since Sept. 5.

Renters are feeling the pinch. The majority of respondents (67.68 percent) indicated that they had experienced financial hardship directly related to the coronavirus pandemic in 2020. Of these respondents, 40.43 percent reported lost wages and 17.48 percent experienced a different pandemic-related hardship. Another 9.77 percent experienced financial hardship due to medical bills.

While a $600 stimulus check will help Americans who are struggling financially, it may not have quite the impact lawmakers hoped it would. A recent Bankrate survey indicated that 53 percent of people said the check won't last them through the month. So, individuals and households with the greatest financial need are applying it to their most urgent needs first.

“If you're jobless, you should obviously pay for one of three things," Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, told CNBC in December. "Either shelter, food or medication."

Renters in financial distress emphasized necessities

Apartment Guide respondents experiencing financial hardship followed this advice when spending their stimulus checks. Shelter and shelter-related bills were their top priorities. Putting food on the table came in third.

A total of 693 respondents who are experiencing financial difficulties told us how they'd spend their $600 stimulus check. Of these, the largest percentage (22.79 percent) indicated they'd use their stimulus money to pay rent. Paying their utilities (expenses closely tied to shelter) was the second most popular option at 18.75 percent.

Food insecurity — when you can't afford or don't have access to enough healthy food to meet your daily nutritional needs — is on the rise in the United States. So, the fact that 11.11 percent of respondents hit hard by the pandemic earmarked their stimulus check for food and groceries seems like a logical use of funds.

This group focused on paying off high interest rate debts, as well. The fourth-highest priority for respondents experiencing financial difficulties was paying off credit card bills, with 10.53 percent indicating that this would be their focus.

Interestingly, more than 10 percent of renters who claimed to be in financial distress did not receive a stimulus check.

A closer look at financially-challenged households

Most respondents (54.68 percent) experiencing pandemic-related financial challenges reported a household income between $10,000 and $49,999. Of these financially challenged households, 50.02 percent lived in apartments and 41.84 percent rented homes. These figures are very similar to the percentages of the overall survey pool.

However, the make-up these of struggling households is different from the broader survey results. Just 15.44 percent of these financially-challenged households contained a single person or a single person and their pets. That number is significantly higher than the 38.38 percent reported in the overall survey.

This means that a higher percentage of financially-impacted homes contained more than one individual. They contain any combination of roommates, partners and family members. Our survey did not differentiate between wage-earning children and children who didn't work.

Financially secure renters saved and paid down debt

Of the 1,024 individuals who responded to our survey, 32.2 percent indicated that they had not experienced financial hardship directly related to the pandemic in the last year. These renters used their stimulus checks very differently than people in financial distress.

Most notably, many of them didn't spend their stimulus checks at all. The largest percentage of these renters (22.66 percent) opted to put their money in savings. In contrast, only 7.9 percent of respondents who said they were experiencing pandemic-related financial hardship said they planned to save all or most of their stimulus checks.

In addition, 14.5 percent of financially secure renters say they didn't receive a stimulus check.

Many Americans saved at least part of their first $1,200 stimulus payment from the Coronavirus Aid, Relief and Economic Security (CARES) Act last spring. The savings rate soared to its highest level in years, as households hunkered down to see what the year would bring.

Saving even a small amount of money can help individuals navigate future financial challenges. If lawmakers opt for a third stimulus package, they might want to do it sooner, rather than later. Curiously, economists say that people tend to save more money when they have time to anticipate and plan for a windfall.

“Longer payment delays make it more likely that households save their stimulus checks, which undermines the goal of stimulating the economy by boosting consumption," says Boston University's Linh Tô. She co-authored a recent stimulus savings study with Niel Thakral of Brown University.

Renters who feel more financially secure also concentrated on paying down high-interest credit card bills. Of this group, 12.08 percent indicated that they'd use all or most of their stimulus check for this purpose. Essentials like paying utility bills (10.88 percent) and buying food and groceries (9.97 percent) rounded up the top four and injected some money back into the economy.

Concern about back rent is growing

President Biden extended the eviction moratorium until March 31, giving renters worried about eviction a little more time to chip away at unpaid rent bills. But an eviction moratorium only allows renters to stay in their homes — it doesn't eliminate or forgive rent payments. Renters will still owe back rent and any associated fees and interest.

And those costs and fees are adding up. The National Multifamily Housing Council (NMHC) President Doug Bibby indicated that Moody's Analytics estimates that back rent debt will have reached $70 billion by the end of the last calendar year.

Our respondents owe back rent, as well. A significant number of financially impacted renters — about 42 percent — told us that they owe back rent for January 2021 or from further back in 2020. Only 7 percent of renters who indicated that the pandemic hadn't impacted their income said the same.

Falling behind on rent is a growing trend. Roughly one third of U.S. households (about 107 million people) rent their homes. The NMHC's Rent Payment Tracker reported that 88.6 percent of 11.6 million professionally-managed apartment units made a full or partial rent payment by Jan. 20, 2021. That's a 294,224 household decrease from the share that had paid by Dec. 20, 2020.

This indicates that renters across the country are having trouble making rent. That adds additional stress and financial uncertainly for landlords and property management firms, too.

Resources for renters

The NMHC lists several national and state resources that renters can use if they're experiencing financial difficulty. They include rental assistance and unemployment assistance, as well as information about grants, charities and affordable housing resources.

Applying for state or federal rental assistance or other emergency aid can take time and paperwork. And not everyone will qualify. Using a one-time $600 stimulus check for rent isn't a long-term solution for getting over a pandemic-related financial hurdle. So, it's smart to obtain financial help from as many different avenues as possible — and to start as soon as you anticipate that you'll have trouble making rent.

There are many ways to handle a financial shortfall. (Just be aware that many will require effort and paperwork on your end.) Our respondents took multiple approaches. An overwhelming majority of respondents who were experiencing COVID-related financial challenges (89.23 percent) took action to secure funding for rent or reached out to their landlord to make a new plan that better reflected their new economic reality.

Of all our respondents, 15.61 percent received local or federal rental assistance. Many more opted to borrow money from friends and family (32.80 percent) or request or create a new payment plan from their landlord (31.85 percent). Some respondents asked for a rent freeze (27.71 percent) or a rent reduction (24.20 percent) because they couldn't make rent because of the coronavirus. Others used their security deposit to cover a rent shortfall (13.69 percent), while a minority (8.60 percent) took the step of breaking their lease early.

Survey methodology

The data in this article come from an Apartment Guide survey conducted in January 2021. The survey collected 1,024 responses from current renters over the age of 18. Most survey respondents were ages 18-29, with 42.62 percent of respondents falling in this age range. Another 33.04 percent were 30-44, 18.48 percent were 45-60. Another 5.87 percent listed their age as 60 or older.

Survey respondents were 52.72 percent female and 44.28 percent male. They rent many types of homes, including apartments, houses, condos and townhomes.

Survey results were self-reported, so they're subject to response biases. Respondents could choose multiple answers describing the individuals who make up their household and the steps they've taken to work with their landlord or property management team to prevent eviction. All other questions in the survey asked respondents to select one answer that best described their situation.

Fair use statement

This survey information is available to help interpret coronavirus economic trends and renter sentiments. It can assist with research projects, articles and determining how to use your own stimulus check.

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