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How Americans of different ages used their stimulus money

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How you spent your stimulus check likely depends on how old you are.

Also critical to spending decisions was your employment status, as impacted by the coronavirus outbreak.

Thanks to the federal CARES Act, American households received checks this spring up to $1,200 per adult and $500 per child under age 17 — with a top amount of $3,400 for a family of four that met the income and age requirements.

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Most people (81%) who said they'd lost income since March said the money would go toward expenses, rather than paying off debt or adding to savings, according to the Bureau of Labor Statistics.

Food was the top category, according to the government's survey on consumer spending. Two-thirds of consumers (66%) listed food as primary concern, followed by utilities and telecommunications, at 50%.

Recreational goods came in dead last, at 3%.

Age matters

Gen Xers were the least likely to put the money toward savings, at 10%, and more than a quarter of Silent Generation members (27%) were most likely to stash it, according to the BLS findings. 

When it came to paying for things, these two demographics swapped places: Gen X was the age group with the highest percentage (74%) saying they'd use their checks on expenses, and the Silent Generation was the lowest (59%).

It's understandable, since the older demographic are less likely to be financially impacted by unemployment and could divert the money to savings. Gen X, on the other hand, is likelier to feel the loss of income since they generally are in the middle of their working lives.

Higher savings?

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"My guess is that a lot more money was saved than the data suggests," said Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget.

"For one thing, saving and borrowing are two sides of the same coin," he explained. "Paying off debt is really the same as adding to savings."

"Take an extreme case: Putting $1,000 in my 401(k) has about the same impact on my finances as putting $1,000 extra into my mortgage," he said.

Not to get too granular about survey language, but Goldwein points out people were asked to say in a general way where the money went.

That means someone you'd describe as a typical good saver could, for example, put 20% of their income into savings, Goldwein says. "That would probably still qualify as 'mostly pay for expenses' under this survey," he said.

Ramping up savings

The impetus to save has gotten stronger, for savers as well as people who formerly considered themselves spenders, according to a survey of more than 5,400 adults in August conducted for CNBC + Acorns by SurveyMonkey.

Nearly half of those who described themselves as spenders or savers said they were now more of a saver because of Covid-19, the survey found.

This year, 60% of respondents said they are savers, up from last year's 54%.

It could have been worse

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In August, we saw a surprisingly resilient economy, says Goldwein.

The reason? People who'd lost their jobs were able to save money during the spring and summer months. "Despite unemployment checks going down [at the end of July], people still had that cash and didn't have to make dire decisions," he said. 

"We're not seeing the [indicators] that makes it look like a big collapse."

Personal savings is one reason we haven't seen a big drop in consumption in August, Goldwein explains. "What we saw in aggregate was that people's spending was way down and their incomes were way up."

Fiscal policy for the win

It's important to see the stimulus checks within the context of several fiscal policy moves, Goldwein says, including Paycheck Protection Program loans, the extra $600 federal weekly unemployment benefit and low interest rates that encouraged borrowing.

"People saved a lot of money over the course of the worst parts of the shutdown — and hopefully that savings will help them weather a decent part of a bumpy and long recovery," Goldwein said. 

Ordinarily, the objective of a stimulus is get people to spend. "This time, a big goal was to get people to stay solvent," Goldwein said.

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