What Should I Do With My Stimulus Check?
If you qualify for the Economic Impact Payment, or more commonly referred to as the “stimulus check", you may have noticed it drop in your account recently. If you were expecting it but you haven't seen it come through yet, you can check the status of that at www.irs.gov/coronavirus/get-my-payment. Regardless, it's a good time to start thinking about how you're going to use that money.
#1 | Essential Needs
If your job or income has been significantly impacted by COVID-19, which is the majority of people, you may depend on this money for basic living expenses—and that's what this money was intended for, so if you're in that situation, by all means, use this to provide basic necessities for you and your family.
#2 | Emergency Fund
However, maybe your income hasn't been impacted, but the future of your job is unknown. If you don't have one already, now would be a great time to start building an emergency fund. While it's difficult for a lot of people, ideally, you should have 3-6 months worth of living expenses in cash for exactly times like this. This stimulus money could give you a little cushion in that emergency fund.
#3 | Debt Paydown
But maybe your income is very stable and you have a sufficient emergency fund. If that's the case, it may be worth considering using this money to pay down debt. You could just start looking at some of your high interest loans and start making more payments on those. If debt is something that really stresses you out, this is worth considering.
#4 | Retirement Savings
Of course, all retirement accounts have taken a hit with the recent market volatility, but that doesn't mean we should stop contributing. In fact, if we can afford to do so, we should look for ways to contribute more. The stock market is on sale right now, so the more that we can contribute today, the better off we're gonna be down the road. Again, that is very unique to your own situation, so talk to your advisor before making any big changes there.
#5 | Big Purchase
Maybe you've maxed out your retirement accounts, you've paid down all your debt, you have a sufficient emergency fund, and your income is stable. If that's the case, you may consider putting this money towards a down payment on a home, or a car, or towards a house project that needs taken care of. This money could give you a head start on some of those things.
#6 | Give
But if you're in a position where you don't necessarily need this money, consider the thousands of people in your community who desperately need this money. Maybe you know a family member or a friend who is in a tough spot financially, even with the stimulus check. Or maybe you know of a local non-profit that is actively helping people who have been negatively impacted by COVID-19. Consider using this money to offer a helping hand to your neighbor.
Other Considerations
I think when making any decision, especially financial decisions, it's vitally important to understand what is most important to you. What are your values? What gives you a drive to wake up every morning? Is it the work that you're doing through your job? Maybe it’s the relationships with friends and family? Or perhaps, the well-being of your community? Let those things drive this decision.
I think one last important consideration of this decision is understanding what is the primary driver of your stress. While it's probably many things right now, start thinking about that. Is it the unknown with your job or income? Is it your retirement needs? Is it the general health and well-being of your family and friends and your community? These stimulus checks may be a way to reduce stress in one or all of those areas, which is something that we all need right now.
While the most prudent use of this money is very dependent on your unique situation, if you're in a fortunate position where you don't necessarily need this money to provide for basic living expenses, take the time to really think and reflect on these things as you decide what to do with that money. And if you ever need somebody to just talk this through with, don't hesitate to reach out. In the meantime, stay healthy, stay hopeful and hang in there!
