Four Things to Do With Your Upcoming Stimulus Check
- Author: Jessica Williams
- Posted: 2024-06-29
Now that Congress is on the brink of passing the $2.2 trillion stimulus package to shore up the economy from the effects of COVID-19, most Americans will awake to the realization that a check is on the way. If you are one of the unfortunate people whose income has been impacted by the coronavirus, you will obviously need this to pay your bills and keep your roof over your head. However, if your income is stable and you are still receiving the check, you can use it as an opportunity to help yourself financially. The most obvious tip that we can give is not to simply spend this money. There are many different things that you can do to get yourself ahead financially. If you are married with an average-sized family, you can receive a check of $3,400. This money can help you in the long run, and it is critical that you do not waste this money. Here are some tips for what you can do with your stimulus check.
Pay Down Debt
As opposed to using the money to make a purchase, you should put it to work to pay down some of your debt. The best way to do this is to find the debt of yours that has the highest interest rate. Let's say that you are carrying credit card with an interest rate of 20 percent. By using your stimulus check to retire this debt, you are actually giving yourself a lasting raise of over $50 a month. You get this money because you no longer have to pay the interest on the debt that you have eliminated. This will also help your credit and will enable you to save money in the long run with lower interest costs coming out of your check every month. The stimulus check can actually be a golden opportunity to break the cycle of debt in which you are stuck.
Save for Retirement
If you put the stimulus check into your IRA, you not only boost your retirement savings, but you also get a chance to buy stocks at a deep discount. This means that your stimulus check will grow even larger as the economy eventually rebounds after America goes back to work. If you are 40 years old and you earn seven percent each year on your money, your family's stimulus check can grown to over $16,000 by the time you retire at 65 years old. The best thing about this is that you do not need to pay any taxes on your gains and your investment can continue to compound over time.
Buy a Dividend Paying Stock
In the same vein, if you can find a high-yielding dividend stock, you can turn your stimulus check into something that can either compound or give you a small monthly income. The dividend check may not be large, but it could give you a couple of hundred extra dollars each year to cover expenses or even treat yourself nicely. Combined with the fact that dividend stocks are on sale right now, the stimulus check is a great chance to get started with dividend investing.
Burnish Your Emergency Fund
Even if your job and income are safe for now, the experts are forecasting some rough times ahead for the U.S. economy. After all, the government does not write checks for over $2 trillion if there is not a profound crisis. It is an unfortunate reality that times may about to be tough for you and nearly every other American.
If you are like many Americans, you may not have the money in your account to deal with an unplanned financial expense that comes out of the blue, such as a car repair. This is a perfect prompt to just put the money aside in order to be prepared when an unavoidable emergency happens. The government wants you to spend this money now to help shore up the economy, but you need to think with an eye towards your long-term financial future. Adding least some of your check to your emergency fund can give you the peace of mind to know that an unforeseen expense will not force you into debt at potentially punitive interest rates.
Uncle Sam is giving you a rare financial opportunity if the stimulus check is adding to your steady income. Take advantage of it for your long-term good.
