What is the best way to spend my stimulus check?
May 8, 2020
According to the Treasury Department, nearly 120 million Americans have received their stimulus checks from the IRS in an effort from the government to stimulate the struggling U.S. economy. Even more have filed or will be filing their taxes due to the federal tax deadline extension of July 15th and are expecting cash back from their returns.
While you may be eyeing a new living room set or enticing new technology (trust us, we are too) here are some ways to use your money with your financial future in mind:
1.) Put your money into a high yield savings account
Due to the far-reaching effects of Covid-19, the U.S. stock market has plummeted, making the option of investing your stimulus check or tax return a risky one. A good alternative is to put that money into a high yield savings account. HYSA’s helps you safely grow your savings without the risk of the currently volatile market. It also provides the extra benefit of an emergency fund, acting as a financial cushion for your essential expenses in the event of lost income.
2.) Increase the equity in your home
If you’ve finished all your puzzles more times than you can count and can’t stand the idea of attempting one more baking recipe-this might be a good option for you. Even small DIY home improvement projects can increase the home’s value and your overall equity. Purely aesthetic upgrades can ultimately make a difference in determining the value of your home. And of course, there’s the additional benefit of keeping you busy while staying in. So go ahead and install new flooring, change the outdated light fixtures, or paint over colors that are too vibrant.
3.) Pay down debt
Many Americans find themselves struggling with debt. Student loans, credit card debt and other high interest loans can be overwhelming and difficult to keep up with. Using your stimulus check and tax returns towards paying down high interest loans and cards may be financially beneficial and set you up for a more comfortable future. Doing so can help lower your monthly payments and potentially boost your credit. Higher credit scores can open a lot of possibilities for you, including better rates when it comes to large purchases (homes, vehicles etc.).
4.) Save towards a down payment
Now may seem like a silly time to be thinking about saving towards a home. However, if you have not been furloughed or laid off, putting money towards a down payment may put you in a good position to buy when the market recovers. If you already own a home, the money could also be put towards a down payment on an investment property-which often has high ROI.
5.) Talk to a financial advisor
Finally, if you are looking to make the best decisions possible with your money, consulting an expert is always the way to go. Speaking with a financial advisor is a proactive way to set yourself on track to achieve your financial objectives. They will be able to guide you towards the investments and money management that best suits your long-term goals.
However you decide to spend your check, always make sure your bills are paid first! Missed payments can be detrimental to your credit, which could impact your ability to get hired, lease a new apartment etc.
Categories: helpful tips