9 Smart Ways to Use Your Stimulus Check

This week tens of millions of Americans have started to receive stimulus checks via direct deposit. The direct payment of stimulus checks is one part of the Coronavirus Aid, Relief and Economic Security (CARES) Act that was signed into law on March 27, 2020.

Eligible American taxpayers receive a one-time check up to $1,200, married couples get $2,400, and an extra $500 per child under the age of 17. Individuals making up to $75,000 or couples making up to $150,000 are eligible. Millions of Americans are reporting issues or delays in receiving their funds via direct deposit. You can view the status of your check here or submit your direct deposit information to get your stimulus funds earlier.

Stimulus programs are designed to increase consumer spending and help the economy, but tens of millions of Americans are facing more pressing issues such as unemployment, paying rent or mortgages, and even putting food on the table. Many people are also looking for ways to cut their spending during quarantine as well.

As a financial coach, I’ve had clients impacted in many ways, so today I’m sharing some smart ways to use your stimulus money.

1. Buy food and household supplies — If you’re a non-essential worker and at home right now, you need to have enough food and household supplies for the foreseeable future. No matter what your financial situation is right now, survival is the most important thing during these difficult times. Make a trip to your local grocery store and pharmacy and stock up. If your family or neighbors need assistance you can also lend a helping hand.
2. Start or add to your emergency fund — More than 20 million Americans have filed for unemployment benefits in the past month. With so much uncertainty right now it is important you save for emergencies. 69% of Americans have under $1,000 saved in their emergency fund. If you don’t have an emergency fund, your stimulus funds can help you start one. Already have an emergency fund? Keep funding it until you have 3–6 months of living expenses saved. This is especially important if your company or industry has taken a hit from the Coronavirus as your job, income, and benefits could be at risk.
3. Pay off high-interest debt — The average American household has over $7,000 of credit card debt. If you have already built up your emergency fund, you can use your stimulus check to pay down high-interest debt such as credit cards, payday or personal loans. Look at all your outstanding debts and see how you can have the biggest impact using your stimulus funds.
4. Donate to food banks and local charities — If you’ve already done the first three things on this list, I believe now is the time to support your community and help those fighting on the front lines of the pandemic. Food banks are in dire need of donations and volunteers, and many local charities are rising to the occasion to serve those in need. You can donate food and supplies, money, or even donate your time to those who need it.
5. Pay down student loans, auto loans, or your mortgage — Now is a great time to get ahead on student debt and auto loans or pay down your mortgage early. Paying down federal student loans are especially attractive since most of them are frozen right now and are not generating interest. You have a big advantage as you can put most of your payment towards the principal balance on your loans. Don’t pay any extra on these forms of debt if you still have any high-interest debt as you’re paying unnecessary interest.
6. Invest in yourself — Now is a great time to invest in yourself and use some of your stimulus funds on growing as an individual. You could find a new hobby, develop a new skill, sign up for an online class, or buy something you’ve been holding out for. If you don’t have any high-interest debt and already have a solid emergency fund, there is nothing wrong with investing your stimulus money on yourself.
7. Order takeout from your favorite restaurant — Many restaurants have been forced to either close or adapt during this global pandemic and need our support more than ever. With most restaurants reporting revenue declining by more than 50%, now is the time to support your favorite restaurants that are still open. You’ve also probably grown tired of all the cooking, so support your local restaurants and your community.
8. Buy gift cards to local small businesses — The CARES act provided billions of dollars of relief to some businesses, but a lot of businesses got nothing as the stimulus money went quickly. Thankfully there is still a way for you to support small businesses that are temporarily closed. You can buy gift cards to your favorite local small businesses, which gives businesses much-needed capital that they can use to cover expenses, pay employees, and help them survive this pandemic.
9. Save for retirement — If you’re not already investing either through employer-sponsored retirement accounts like 401ks or individually through IRA’s you need to start now. Take advantage of the tax deductions and savings and max out all available retirement options. Most of my coaching clients are already investing and so their plans haven’t changed much. In fact, some are investing more aggressively right now. Don’t hesitate to use this time to learn more about investing, meet with a financial planner, and accelerate your path to retirement.

These are just a few smart ways my coaching clients are using their stimulus checks. Now I’d love to hear how you’re spending yours. Let me know in the comments how you’re using your stimulus money.

Do you need help with your finances?

Want to put a plan together to get out of debt, save and invest more, and find financial freedom? As a financial coach, I help my clients with all of this and I offer free 30-minute consultations for anyone interested. In order to help as many people as possible, I have lowered my coaching fees by 50% to help those in need during this difficult time. You can learn more and sign up for a consultation here.

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