Friday, May 1, 2020
Countdown to Financial Fitness: What to do with Your Stimulus Check
Countdown to Financial Fitness: What to do with Your Stimulus Check: Many Americans will be getting, or have already received, a check—or direct deposit—from the U.S. government this month. These Economic I...
What to do with Your Stimulus Check
Many Americans will be getting, or have already received, a
check—or direct deposit—from the U.S. government this month. These Economic Impact Payments were authorized
by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in an effort to mitigate the fallout from the shutdown of our economy in response to
a global pandemic.
For some workers, unfortunately, it won't be enough. Some
businesses were just too fragile to hang on, to continue to pay overhead when
their income stream halted, and the jobs they'd generated won't come back.
Unemployment, once you can push through the crowds and jammed phone lines to
file, only replaces a portion of your salary. Thousands of workers and
entrepreneurs who were overextended and lived paycheck to paycheck are in
trouble.
But for others, the stimulus check represents a windfall. I've
written several posts with suggestions about what to do with a windfall. In my
book Live Well, Grow Wealth, I devote an entire chapter to the
importance of maintaining an emergency fund (three to six months' living
expenses in a low-risk, liquid investment like a savings account or money
market fund) and I advocate using a windfall to jumpstart your emergency fund
if you don't already have one.
Other uses for a windfall I've recommended include paying down
debt or contributing to your retirement fund. This year, the deadline for
making 2019 contributions to an IRA (Individual Retirement Arrangement) or HSA
(Health Savings Account, available to policyholders of certain high-deductible
health insurance plans) has been extended to July 15.
However, I'm not going to make those recommendations for your
stimulus check. Its purpose was to breathe life into our dying economy. So, if
you don't need the money to cover basic living expenses, spend it!
Get started on your Christmas shopping. Buy some books from your
local bookstore. Eat at your favorite local restaurants; if they're not open
yet, order take-out or have your meal delivered. Get your hair done once it's
safe to do so. Purchase that new appliance or outfit or toy you've been
dreaming about. Buy some plants from your local nursery to spruce up your yard.
Nonprofit organizations are hurting. Fundraising events have been
canceled, and charitable giving dries up faster than discretionary spending
when people are struggling to feed their families. So, if you feel
uncomfortable spending the stimulus money on yourself, donate to your favorite local
charity.
If everyone puts what they can back into the economy, perhaps we'll
avoid another Great Depression-like scenario once we finally come out of this
pandemic.
What are your plans for spending your stimulus check? I'd love to
hear your comments.
Subscribe to:
Posts (Atom)