If we see another set of checks come out, this will immediately help make ends meet for many individuals. Hopefully, you have been proactive in preparing for a recession, including building up an emergency fund to cover multiple months of expenses, and avoided (or paid off) high-interest debt. For those who haven’t managed this recession most effectively or are unaware of what your best options are, consider these tips for using your stimulus check.
Put it in Your Savings
Most of the people who qualified to file for the first or second stimulus check were in retail, hospitality, and restaurants, but now the impacts are reaching more industries and lines of work. Even those who are considered white-collar workers, who are most likely working from home now, are at risk. Jobs are being lost at a rapid rate, and the unemployment rate has not improved significantly.
If you are noticing that the company you work for is financially struggling, it would be smart to put your stimulus money in the bank, even if you already have an emergency fund. Also, be cautious about using these funds to make your rent, mortgage payment, utilities or services, especially if you’ve lost your job or your hours have been reduced. It may be wise to contact your creditors: Many offer temporary bill deferrals, and your home lender or landlord may be accepting abatements.
Some people may think it is wrong to use money the federal government is sending out to stimulate the economy to make a profit. Although this may seem like a slippery slope, these funds are being sent out with no strings attached. You get to decide what to do with it because it is YOUR money.
Besides, investing a stimulus check is reasonable because it can grow your wealth and help you become more financially prepared for whatever the future brings.
If you save it for retirement, you will be less dependent on Social Security. If you put it towards your child’s education, you will give that child a jump start with less college debt or training in a skilled trade which will help the economy in the future.
Sure, it might be good in the short term to use that money for consumption, but it may be wiser to think about people’s long-term financial health, the economy, and the country.
It is true that spending does help people in its own way, since every item you buy keeps people working, from the people who design products to workers in the factories to the truck drivers to warehouse workers to distributors and even to retail outlets. Spending the money on a new phone, for instance, doesn’t solve any real issue, but it does drive the economy.
If your funds allow, now is a better time than ever to support your local charities that feed and house those less fortunate. There are many charities that are understaffed and don’t have the resources to meet today’s needs. If you have the means, this could be the best impact you can make with some or even all of your federal stimulus dollars.
Use It How You Think is Best
Some consumerism isn’t necessarily a bad thing. Whether it’s a splurge or something you’ve been putting off, you shouldn’t feel guilty if you decide to spend your stimulus check on something you might not otherwise have been able to purchase. If you have a reliable source of income, you have every right to spend it how you wish.
If you’re able to support those in your community who are struggling, that is great, but if you are in a position that you can use those funds to spend on a home repair or appliance replacement you have yet been able to afford, that is just as reasonable. It’s your money, with no strings attached, so it is up to you to determine how to make the money go the farthest.
At the same time, keep in mind that it’s also a good decision to sock it away in the bank or invest it for the future because it is up to you to protect your family’s finances for future crises, too.