Key Takeaways

  • The stimulus checks will only cover 48% of individuals’ monthly spend on average, or 15 days worth.
  • Households with up to four people will benefit the most.
  • 14.1 million Americans do not have a bank account, and will be last to receive their checks.

The CARES Act will provide much-needed economic assistance to tens of millions of Americans who may lose their jobs, their sources of income, or be in some way impacted by the economic recession brought on by the 2020 pandemic. 

While everyone’s economic needs are different, we wanted to take a look at how much the stimulus actually covers the average American’s expenses. While there is no ‘Average American’, the Department of Labor collects data on American “consumer units,” which allows us to view average yearly expenditures for singles, couples, and families. We can also see the average breakdown of a consumer’s monthly spend across categories. A consumer unit can be composed of an individual, or various members of a household who use their income to make joint spending decisions, whether they’re related or not. 

By overlaying the estimated stimulus check amount with the Department of Labor’s expense estimates , we found that the checks will cover less of individuals’ monthly expenses compared to families. The lowest earning Americans, 14.1 million of whom are unbanked, will likely receive their checks closer to summer, which could exacerbate their financial stress.

According to the Bureau of Labor statistics Consumer Expenditure study: 

  • One ‘consumer unit’, a household with one person, earning up $70,000 annually, spends $29,700 per year or $2,475 per month, on average.
  • A three-person household making up to $150,000, spends $4,665 per month, on average.
  • A four-person household making up to $150,000, spends $5,226 per month, on average.

So, what does the stimulus check mean to each of these households? Stimulus check amounts are determined by either 2018 or 2019 tax information. Single earners up to $75,000 per year will be receiving $1,200. Those filing jointly earning up to $150,000 will receive $2,400. Additionally, for each dependent under 17, individuals or families will receive $500 per child. There also are reduced stimulus check amounts for Americans earning more than $75,000 which are subject to certain qualifications.

For qualifying individuals, the $1,200 check covers 48% of their monthly spend on average, or 15 days worth. For qualifying couples with one child it would cover 62% of their monthly expenses, and for those with two children, it would cover up to 65%, on average.

The Department of Labor report doesn't separate expense data from two-person households made up of single parents with one child versus two-person households composed of two adults. To estimate the stimulus check’s impact on single parents, we examined USDA Consumer Expenditure data to project that qualifying single parents (with incomes at or below $59k) will spend $172,200 per child from birth to age 17. While spend varies by region and age of the child, this works out to roughly $844 on average per month.

Meaning that for single parents, the additional stimulus amount of $500 per month represents a little over half of what they might spend per child.

Single adults are getting the least proportion (less than half) of their expenses covered by the stimulus check. While they likely have fewer expenses without children, single consumers account for more than a quarter of all consumer units, according to the Labor Department. 

Housing Costs Remain the Highest Expense

For everyone, but especially single consumer units, their biggest spend is by far housing. Single consumer units spend more than 7% over the national average on housing.

As layoffs mount or people have their hours and incomes reduced, personal budgets will likely be stretched, causing some Americans to miss their monthly rent or mortgage payments. According to the National Multifamily Housing Council (NMHC) Rent tracker , we’re already seeing this happen. There has been a 13% drop in the share of apartment households that paid rent on time (through the 5th of the month) compared with this time last year. The biggest consumer banks in the country have also just announced taking massive loan loss provisions against what will be a rising wave of defaults.

Many Americans Will See Checks Delayed by Banking Hurdles

The problem may be compounded by the fact that not everyone will be receiving their stimulus check at the same time, as the rollout will be broken up by those who have a direct deposit account on file with the IRS, and those who don’t. If you filed your income taxes in 2018 or 2019 and provided your direct deposit information to the IRS, your stimulus check was estimated to be in your account between April 9 and 14. About 8 in 10 taxpayers have direct deposit, according to the IRS, and those who don’t have it will receive their check by mail at a later date. 

Unfortunately, approximately 6.5% of U.S. households are unbanked, meaning that no one in the household has a checking or savings account, preventing them from receiving direct deposits. That’s 14.1 million adults who will have to wait for a paper check to arrive in the mail, assuming they paid taxes last year.

Those who did not file taxes in the past year and don’t have direct deposit will have to apply directly with the IRS for their stimulus checks— a lengthy process which requires a lot of documentation including proof of address, to get your stimulus checks.

Only 2.2% of unbanked households make more than $75,000 per year, meaning nearly all Americans without a bank account will be eligible for a stimulus check, but forced to wait for paper mailings. 

It’s important to note that the stimulus checks are not meant to replace income for those who have been laid off or experienced income reductions, but rather to help people pay part of their monthly expenses without falling deeper into debt. Other sources of support including unemployment insurance and loans for small businesses or independent contractors are also available to ease the loss of income.

What is becoming more clear by the day is that more aid will be needed by all Americans who have lost their livelihoods, especially if the economy remains shut in for several more months. Even when the economic declines abate, it will take months, if not years for the unemployment rate to fall and for millions to resume earning the incomes they have recently lost.

[Research and charts by Amanda Morelli]