What to Do With Your Coronavirus Stimulus Check

With the stock market on a roller coaster and thousands of people filing for unemployment, the news of a possible stimulus check is a small ray of hope in these uncertain times. At this time, it looks like the amounts will be $1200 plus $500 per child for those earning up to $75,000 for individuals or $150,000 for couples. The amount will be reduced for higher earners and completely phased out for incomes of $99,000 or $198,000 for couples To calculate your amount, check out one of the online calculators, such as this one from CNN.

With that in mind, here are a few suggestions for how you can use your stimulus check once it arrives in the next few weeks. 

Spend it 

If you need the money for food and other essentials, obviously you just spend the money. No shame, no blame. That’s what you do. If you don’t need to spend it to survive, read on. 

Create or add to your emergency fund

By far the most important thing you can do right now is have an emergency fund. Although financial advisors generally recommend keeping an amount equal to 3-6 months of living expenses in a savings account, 9-12 months worth is a much safer goal. The more, the better. Having cash is the best way to safeguard your financial future. 

If you already have enough cash on hand: 

Keep it in cash anyway.

Until things start to stabilize, it would be hard to have too much cash. You could allocate it towards another savings goal, but don’t spend on any of those things yet. Wait until you are more confident that your financial situation is secure and the economy stabilizes. 

If you’re eligible, add it to an IRA or Roth IRA.

IF you have enough cash to weather the storm, now is not a bad time to add to your retirement savings. Investments are on sale and if you are confident you don’t need the money for awhile, this might be a good move. 

Spend it at local restaurants and small businesses.

You need to eat and buy supplies and local businesses desperately need income. You’ll be helping the local economy and hopefully keeping people employed. Win win! 

Donate it.

So many people are struggling right now and a donation to a shelter or food shelf could make a huge difference. Churches, nonprofits, arts organizations, etc also rely on donations and could benefit from some extra money. 

What NOT to Do

If you do not have a healthy emergency fund, do not under any circumstances use it to purchase large non-essential items. If your refrigerator goes out and you need a new one, yes, by all means buy a new one. A new TV? No. A vacation? No. I know it’s boring, buy you just never know when you’re going to need the cash. I promise there will be a day when you can go back to buying splurge items. That time is just not now. 

It’s not all or nothing

While the stimulus checks certainly aren’t going to sustain you for very long if it’s all you have to cover expenses, it is still a sizable chunk for someone who still has sufficient cash flow at this point. For those people, it is certainly reasonable to divide up the money and use it in a variety of ways.

Although it might be difficult for some people to wait for the check to arrive, most of us will benefit from having a little additional time to take stock and come up with a plan for the money.