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What should you do with your stimulus check?
As you may know, millions of eligible Americans are receiving a second stimulus check as part of the $908 billion stimulus package signed in December, 2020.
This enduring pandemic continues to impact individuals and families in so many different ways. While the economy has been able to rebound a bit, many are still feeling the effects of job loss, limited hours, and health and financial hardships. While this round of stimulus is of a smaller amount as compared to the CARES Act signed in March 2020, this money can’t hit their bank accounts fast enough as it is a much needed lifeline.
If you are eligible for these payments, you may already see it posted via direct deposit. Hard copy checks to those eligible are expected to be received in January as well.
Here are some of the ways our advisors are suggesting people use their checks:
While $600 (depending on your situation, this could be more or less) may not go as far as the stimulus payments last year, it can help with some immediate expenses and necessities. Things like mortgage/rent payments, food, utilities, household supplies, baby formula, etc. Using this cash from the stimulus checks can help you avoid charging more onto your credit cards and dealing with potentially high interest rates.
Build (or re-build) your emergency fund
This pandemic has underlined the importance of having an emergency, or rainy-day fund, which can help soften the blow of a setback. This stimulus check could be a welcome addition or even a jumpstart to creating one. Our advisors typically recommend that our customers have an emergency fund that can cover 3 to 6 months of living expenses. It can help give you some peace of mind and stability in uncertain times.
Pay down high interest debt
If you haven’t been financially impacted and are comfortably covering normal expenses, you may want to consider paying down some of your higher interest-rate debt. While not all debt is created equal – both financially and how you feel about certain types of debt – paying down high-rate credit card debt saves you more money in the long-term.
Save and invest towards your goals
If you have been fortunate enough to remain in a healthy financial position during these times, you may want to consider funding your short-term or long-term goals. Maybe you want to put it towards a more immediate financial goal like an upcoming wedding or home improvement project. Or consider contributing to an IRA.
Donate to a worthy cause
If you can afford it, maybe you’d like to donate some or all of your stimulus check to help those who’ve been severely impacted. The strength of communities have been put on display over the past year with charities and food banks being counted on more than everduring these tough times. Donations to your local charities can help deliver goods and services in your community. Plus, they may be tax-deductible.
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