
Many
recipients may be wondering: What is the best way to use this money?
To
help you determine the most financially responsible course of action to take
with your stimulus check, here is a list of advice and tips from financial
experts and advisers on how to use this money.
Cover Your Basic Life Expenses
First
and foremost, make sure you can afford to cover your basic necessities. With
millions of Americans out of work and lots of them still waiting for their
unemployment insurance to kick in, many people are struggling to put food on
their tables. Most financial experts agree that it’s best not to make any
long-term plans for stimulus money until you can comfortably cover everyday
expenses.
Charlie
Bolognino, CFP and owner of Side-by-Side Financial Planning in Plymouth, MN,
says this step may necessitate creating a new budget that fits the times. With
unique spending priorities in place, an absent or diminished income and many
expenses, such as subscriptions and entertainment costs, not being relevant any
longer. Therefore, it can be helpful to reconfigure an existing budget to
better suit present needs. As always, basic necessities, such as food and
critical bills, should be prioritized.
Build Up Your Emergency Fund
If
you’ve already got your basic needs covered, start looking at long-term targets
for your stimulus money.
“I
would immediately place this money in my emergency fund account,” says Jovan
Johnson, CEO of Piece of Wealth Planning in Atlanta.
Emergency
funds should ideally be robust enough to cover 3-6 months’ worth of living
expenses. If you already have an emergency fund, it may have been depleted
during the pandemic and need some replenishing. If you don’t yet have an
emergency fund, or your fund isn’t large enough to cover several months without
a steady income, you may want to use some of the stimulus money to build it up
so you have a cushion to fall back on during the lean times that are likely to
come in the months ahead.
Pay Down High-Interest Debts
According
to the Federal Reserve Bank, Americans owed a collective $930 billion in credit
card debt during just the fourth quarter of 2019. Using some of your stimulus
check to pay off high-interest debt would be a great way to get a guaranteed
return on the money, says Chris Chen, of Insight Financial Strategists in
Newton, MA.
Boost Your Savings
If
your emergency fund is already full and you’ve made headway on your debt, it
can be a good idea to use some of the stimulus money to add to your Community
Financial savings account, Premier Checking, or open a new Certificate of
Deposit.
Consider
all of your options before choosing how to spend your stimulus money. In all
likelihood, this will be a one-time payment received during the pandemic. If
you need further assistance, feel free to reach out to us at (877) 937-2328. We’ll be happy to help
you maintain financial stability during these uncertain times.
Your Turn: How are you spending your
stimulus check? Tell us about it in the comments.
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