The Coronavirus Stimulus Check will be deposited for millions of American’s this week and I wanted to help you navigate spending the money. It is easy to see a large sum of money hit your bank account and immediately think about all of the things you can buy with that money. However, before you spend any money there are a few things you may want to consider.
If you are an American taxpayer who filed taxes in either 2018 or 2019, a senior or a retiree you should see an Economic Impact Payment. If you are not sure if you are eligible for the stimulus check please visit the IRS website for more information.
What is the Stimulus Check?
The Economic Impact Payment also is known as a stimulus check is a tax credit for 2020 being paid to United States residents starting in April 2020. This payment is to help support the American people and economy during the Coronavirus pandemic.
- Individual taxpayers will receive $1200
- Married Filing Jointly taxpayers will receive $2400
- Families with Children under 17 years of age will receive $500 per child
There are stipulations regarding income. To find out if you are eligible based on your income and specific circumstances please visit the IRS website.
When will I receive my money?
Stimulus check payments will begin to be deposited on April 15, 2020.
If you are a non-filer you can enter your banking information on the IRS website to ensure you receive your money in a timely manner. If the IRS does not have your banking information you will be mailed a check at a later date.
If you are curious where your payment is the IRS will be releasing an app soon. You can find more information about “get my payment” here.
7 ways to Spend Your Coronavirus Stimulus Check
There is so much that goes into spending your Coronavirus Stimulus Check.
Here are a few questions that you should ask yourself before touching the money.
- Am I an essential worker? Is my income stable?
- How likely am I to contract the Coronavirus?
- Would my family be okay if we were out of work for 2 weeks on quarantine?
- What are the long term impacts of the Coronavirus on my household income?
- Am I able to pay my bills right now?
Once you have an understanding of your situation and what impact the Coronavirus will have on your family, then you can begin to plan your spending (or saving) of the stimulus check.
Cover Your 4 Walls
Covering your 4 walls is the most important thing to do. You need to keep a roof over your head with electricity. You need to have food in your home to feed your family and transportation if you are able to work.
Covering your 4 walls should be the first thing you consider with the stimulus check. If you have been laid off, hours reduced, or self-isolating then you will need to set aside the stimulus check to help keep our family afloat during this uncertain time.
Strategize Your Spending
If your 4 walls are covered for the long term it is time to strategize your spending. This is when you look at the bigger picture.
What will your income look like in 1 month? 3 months? If you are an essential worker and do not expect anything to change then you can move on to some of the other suggestions.
If there is more uncertainty in your income then you will need to strategize how you spend the stimulus money.
Create a long term budget to plan out how to spend the money. This a good time to break the paycheck to paycheck cycle if possible and get yourself ahead.
This will help ensure you are prepared for the unknown that may be in your future.
Build Your Emergency Fund
If you do not have a 3 to 6-month emergency fund then using the stimulus check to save for a rainy day should be at the top of your list if your 4 walls are taken care of.
An emergency fund will help safeguard you against the unknown and keep your household afloat during uncertain times. Saving for emergencies should be a long term wealth building strategy and something that you should start as soon as possible.
Pay Off Credit Card Debt
If you’re an essential worker with your 4 walls covered and a long term emergency fund it is time to pay off your credit card debt.
Even as an essential worker there is uncertainty. You may contract the Coronavirus and be out of work for 2 weeks or longer. Once your emergency fund is built you can start looking at your debt.
Paying down high-interest debt will not only save you money in interest over time but it will also reduce the burden on your income.
There are two main repayment methods when it comes to paying off your high-interest date.
You can use the debt snowball, paying off the smallest balance first.
You can also use the debt avalanche, paying off the highest interest rate first.
Be sure to weigh the pros and cons of both methods before making a decision on how you’ll pay off your debt.
Spend Money at Local Small Businesses
Many small businesses have had to temporarily close their doors during this time because they are not deemed essential.
This is the perfect time to support a restaurant by ordering a carryout order. Other small businesses may have added an online storefront for you to shop from.
You can also set aside the money to support your local small businesses after the stores open again in the hopefully near future.
Invest the Money
Investing the stimulus check money is a great way to secure your financial future. You can invest in many different ways including a Roth IRA or purchasing mutual funds.
If you are new to investing and need help getting started I suggest hiring an investment professional. You may need to wait for businesses to open again before meeting with an investment professional.
Donate to Charity
Donating to a local charity is a great way to support your community during this time. Food banks have been hit especially hard during the Coronavirus due to the number of people out of work and needing support.
If you are going to donate to a charity I recommend learning as much as you can about the charity and how the money will be used.
You can also help a family member or friend during this time by buying groceries for them or paying a bill as an act of service.
Spend Your Stimulus Check Wisely
While some may see the Economic Impact Payment as extra money in their pocket to spend many Americans will need to have a strategy to stretch this money over the long term until they are back on their feet.
This money is meant to help our fellow American’s while out of work and help boost the economy when stores are open again.
The best thing you can do is assess your personal situation and make a game plan that will benefit your family in the long run. This could be covering your 4 walls while you have a lower (or non-existant) income or investing the money in your future.
Whatever you decide to do with the money, know that it is the best thing for your family and your current situation.
I wish you well during this uncertain time.