Congress recently passed the third COVID-19 relief package -- and there’s one part that has many people paying attention. As part of the package, stimulus checks of up to $1,400 will be delivered to eligible Americans. If you’re looking for ideas on how to spend it, consider these 7 options:
1. Spend it on Necessities
The past year has been hard for all of us in a variety of ways. And that may be especially evident when it comes to finances. Whether you made the transition to working from home, continued working in the office, or whether you experienced an employment change such as being laid off.
Especially if you’re currently not working, the most important thing you can do is spend your money wisely. Covering the costs of daily living expenses and monthly payments is a priority, and your third stimulus check can help you in that area. Make a list of your most important necessities, such as mortgage or rent, utility payments, and the cost of food.
Even if you are still working regularly, using the stimulus check to help cover the basics can help give you a little wiggle room when it comes to your budget. Though it may not be the most “fun” way to spend your money, you’ll likely still feel the positive impact.
2. Pay Down Debt
Many Americans have debt: the average American has about $38,000 in personal debt, not counting mortgages. And a difficult year likely didn’t make it easier to manage. Whether it’s credit card debt, student loans, or something else, debt and high interest rates often only lead to more financial stress. It often feels out of control.
Consider a couple of debt repayment strategies: the snowball method and the avalanche method. With the snowball method, you pay off your smaller debts first to help build confidence and motivation in the debt repayment process. With the avalanche method, you pay debts with the highest interest rate first.
Whichever method you use, your stimulus check payment can help you get on the right track.
3. Save for the Future
Though it may seem hard to imagine “normal,” post-pandemic life, increased vaccinations and decreased COVID cases in the U.S. are pointing to brighter days. And for many people, it’s enough to allow us to begin dreaming about the future again.
Whether you’re a globetrotter who is ready to plan that next vacation, a parent who is imagining their child’s future, or someone who wants to make sure they’re comfortable and happy later in life. We all have things we need to save for.
If you’re a traveler, set some of your money aside in a savings account so you’re ready to book those plane tickets as soon as you’re able. If you’re a parent, open a 529 college savings account for your child’s education. If you’re thinking about saving for your future, contribute to your retirement fund. Especially when it comes to 529 or retirement accounts, the more you save today, the more your money will work for you in the future.
4. Bolster Your Emergency Fund
How else can you save for the future? By making sure you’re covered financially in the case of an emergency. An emergency fund -- or a “peace of mind” account -- can help provide a cushion during life’s more expected moments. This money can help with anything, from a change in employment, to an unexpected home or car repair, to a medical bill.
Your emergency fund can help ensure your emergency doesn’t provide any additional stress on you from a financial perspective. And even if you start small with your amount of savings, it can make a big difference.
Whether you already have an emergency fund or you’re just starting one, using all or part of your stimulus check for your peace of mind account can help prevent your family from falling on hard times.
5. Support a Small Business
At the beginning of the pandemic, many of us went out of the way to support the small businesses that were close to our hearts. A year later, this may have faded from our priority lists as time went on -- especially if we experienced life struggles and changes of our own.
But small businesses still need our help to continue thriving and come out on the other side of the pandemic. If you find yourself with a bit of disposable income in the form of your stimulus check, supporting a small business could be a great way to invest in your local community -- and get some tasty food or a unique, handmade item at the same time.
6. Pay it Forward
Just like small businesses, many nonprofits and charitable organizations have felt the impact of the pandemic in the past year. Are there any causes in your life that you’re passionate about? Maybe you’ve never felt you were in the right place to contribute financially, or you wished you could do more.
Another idea for spending your stimulus check: donate to a charity or organization that means a lot to you. One that is doing good work in your community, and you want to show your support. You don’t have to spend all your stimulus there, but even a little bit can go a long way to help others.
7. Spend it on You
This year has been unlike anything most of us have experienced before. Many of our plans and dreams were altered, and some of the things we enjoyed most in life were taken away from us.
And if you want to spend your stimulus check on something that’s going to make you happy, there’s no shame in that at all. Whatever can make life a little more enjoyable is worth it.
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