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.

Sharon Marchisello is the author of Live Well, Grow Wealth.

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