What to Do with Your Stimulus Check
Time for a little stimulus talk. As part of the $2 trillion CARES Act, the government has started sending out stimulus checks and direct deposit payments to individuals. Because who doesn’t love free government money!
Real quick here, these are the guidelines on the payments:
• $1,200 for individuals earning up to $75,000
• $2,400 for couples earning up to $150,000
• Additional $500 per child
Payments will decrease for people making more, maxing out at individuals earning $99,000 and couples earning $198,000.
Checks have already started going out, so keep your eyes peeled. Or you can opt for direct deposit to your bank account if you want it faster (the IRS might do it automatically if they have your info from previous tax filings). To track your payment or find out more, you can go to the IRS website here. But now we get to the fun part. What to do with it!
Here are a few suggestions if you need a little inspiration.
Yep, you heard right. This one’s easy. And it’s actually kind of the point of these payments – to help the economy stay afloat. So don’t feel guilty about spending that money.
Ideally you’d spend it on necessities like food or utilities or whatever you need right now. We know, not the most exciting, but you can snag that sweet leopard print snuggie when things are back to normal…whenever that will be.
Put it toward your emergency fund
Let’s face it, the outlook for the economy is not great. Over 26 million people applied for unemployment over the past five weeks and there’s a lot of uncertainly ahead. While it’s always a good idea to have some emergency money on hand, it’s more important now than ever. You just don’t know what the future holds.
We typically recommend having between 3 and 6 months’ worth of living expenses in your emergency fund, but if you’re starting with less, that’s alright. This money can serve as a helpful injection. You’ll want to make sure it’s easily accessed, so a savings account would be an ideal place to keep it.
Pay down your debt
Feeling good about your current expenses and emergency fund? Then you could consider using your stimulus to pay down your debts.
If you have any high interest loans, like credit card debt, then you definitely want to pay it down ASAP. Those high rates crush your finances pretty quickly. Lower interest debt like student loans or a mortgage are less urgent to pay down, but it still might be a good use for your new found funds.
If everything is taken care of and you really don’t need the money right now, you might want to consider investing it. Investing is a great way to build wealth over time and should be part of anyone’s long-term plans. Not to mention, the stock market is currently off it’s recent highs, which means you’ll get more bang for your buck.
Keep in mind though, anything can happen with the stock market over the near term (weeks or months). So don’t invest it if you might be needing it soon. We have an investing cheat sheet to help you get started or you can read how to start investing on a budget.