Sourced from the Credit Union National Association
As a part of the American Rescue Plan of 2021, the Internal Revenue Service and the Treasury Department are delivering a third round of Economic Impact Payments (or stimulus checks) to many households across the United States in an effort to boost the economy and help individuals deal with the financial impact of the global pandemic.
While receiving an extra $1400 may seem like a good excuse to splurge, it’s a good idea to consider the coming months and make sure you’re using the money wisely.
What is the most strategic way to use your stimulus check?
COVER THE ESSENTIALS
If the pandemic has taught us anything, it’s that life can be unpredictable. Before spending your stimulus check, take a look at the next few months of bills that may come due and make sure you’re able to cover expenses, such as:
- Mortgage or rent
- Car payments
- Utilities, cell phone bill and internet
- Minimum payments on credit cards and other debt
- Insurance for vehicles and/or home
BUILD AN EMERGENCY FUND
If you’re in a position where you don’t need the money immediately, consider setting it aside in an accessible, protected savings account to use when absolutely necessary. There’s no way to know how long the U.S. economy will suffer as a result of this crisis or whether your financial status may change in coming months. Stashing your stimulus check away for safekeeping may help you ease a potential financial burden down the road.
PAY OFF DEBT
If you’re confident that you’ll have enough to cover basic expenses for the next few months, consider putting your stimulus check toward paying off credit card debt, medical bills, car payments or student loans. While some institutions may offer relief programs in the short term, those funds will still be due later on. You should also prioritize paying off debt with the highest interest rates.
If you’ve established a healthy emergency fund and believe you’ll remain financially secure, you may consider contributing to your retirement through a variety of investment strategies. Earlier in 2020, markets experienced some turbulence, but have since stabilized, so long-term investments may prove promising.
The global pandemic has put a strain on many nonprofits, as the need for the goods and services they provide climbs to an all-time high. If you’re in a financial position to help others during this time of crisis, find a nonprofit that you feel passionate about and consider donating a portion (or all) of your stimulus check funds to those who need it most.
If you’d like to learn more about how planning ahead today can help set you on the path for a better tomorrow, get in touch with one of our financial services representatives. Teachers is here to help you navigate these uncertain times and we stand ready to help.