How to Use Your Stimulus Check Wisely

The CARES Act passed on March 27, 2020, will provide about $2 trillion to help offset the economic impact of the COVID-19 pandemic. The bill included stimulus payments for millions of Americans, and distribution of those payments began this week. (For additional information and tracking, visit the IRS website.)

If you received or will receive a stimulus check, below are some tips for using it responsibly. Keep in mind these are merely suggestions, and depending on your personal situation and employment status, you may have different priorities.

Living Expenses 
First and foremost, make sure your bills are current (or even paid ahead). With millions of Americans currently unemployed, many are having difficulties paying rent, car insurance, utilities, and other everyday expenses. Use this opportunity to catch up on bills, or to pay ahead for coming months. If you’re behind on bills, contact the companies before making your payment, as many are offering special payment arrangements or waiving late fees during the coronavirus pandemic.

Pay Down Debt
Once you’ve taken care of your living expenses, consider applying money to credit cards or other debts in order to lower or pay off the balance. Generally speaking, it’s a good idea to pay those with the highest interest rate first. By paying down these debts, you’ll save money on interest over time, and also reduce the amount of time needed to repay them. This could include student loan payments – check out this article from Forbes about how to pay your student loans during the pandemic.

Build or Establish Savings
If you don’t currently have an emergency fund in place, this payment could help you start one. Whether your employment is currently stable or not, you may face unexpected expenses at some point in the future. From home repairs to medical bills, it’s always a good idea to have a cushion for emergencies. Open or add to a savings account that you won’t touch unless it’s a true emergency!

Support Local Businesses
Of course, one of the main reasons for these stimulus payments is to stimulate the economy. Small businesses are struggling and need your support now more than ever. With many businesses closed or operating with limited hours, consider supporting them in safe ways: purchase a gift card online to use in the future or send to a friend; order carryout or delivery from restaurants; have flowers delivered to a loved one; or utilize online ordering from your favorite stores.

Whatever your current situation, you can use the stimulus payment to make a positive impact on your finances and your community.

 

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