Most Americans will be receiving their stimulus checks in April and May. These checks are meant to coax the economy back into a healthy place.
Although the amounts do phase out as income goes up, most people will come away with something. An influx in cash will be a welcome bright spot for many; but the most important thing you can do when that money hits your account is to make sure you’re making the best decisions with it.
It may be very tempting to see that money hit your account and immediately start spending it. Yet the smartest thing to do is slow down, take a breath, and think through your situation. Impulse purchases are usually a bad idea, and in this case, they can be even more detrimental. We don’t know how long we’ll be in this situation, so smart decisions are paramount.
Pay Your Bills
No matter what you may have heard, you need to keep paying your bills. Yes, your bank can’t foreclose on your mortgage, and your landlord can’t evict you, and the utilities can’t cut you off. Most companies are offering some sort of assistance for those who have been severely financially impacted. However, this doesn’t mean that these bills have gone away. When this situation resolves, all those bills will still be there, and you’ll have larger amounts to face. Paying your bills should be your first priority.
Maintain Your Emergency Savings
If your bills are current, maintaining your emergency savings should be your next priority. Your emergency savings is typically a few months of expenses ready for use in case of emergency, such as medical bills, a layoff, or a major home or car repair. For many people operating on thin cushions, a major expense right now could be what pushes them over the edge, so having an emergency savings is even more important.
Once your bills are paid, try to keep something in reserve.
Pay Off Small Debts
If you’ve been working on paying off some small debts, such as a car, a credit card, a hospital bill, or anything else that is close to completion, this stimulus check may be just what you need to finish off those small debts and give your monthly budget a break. Not only will it give you flexibility in your monthly budget, but paying off a debt can give you a real sense of accomplishment.
Make it Work for You
Every dollar of this stimulus check should go to work for your family in a defined and positive way. If your cushion is thin, the stimulus check will give you a little bit of breathing room and let you feel secure that your essentials are covered. If you’ve kept your regular income or have a bigger cushion, your stimulus check can go toward keeping you financially healthy. And if you were prepared with an emergency fund and have enough income to keep you relatively stable through this time, using your stimulus check to help a small business through your patronage (even a take-out splurge can help), help a neighbor who has lost his/her income, or even donate toward a food bank can help ensure that your stimulus check is doing what it’s intended to do.
These stimulus checks are there to help the economy recover while still keeping our citizens safe. By slowing down and making a calm decision in the midst of all this chaos, you’ll know that you are doing your part.