Many Americans are eagerly looking forward to receiving a stimulus check to provide aid during the coronavirus crisis that has caused so much strain around the nation. If you have that check coming in--or if it's already burning a hole in your bank account--you should carefully consider how you use that check to help you navigate, not only through this crisis, but in the days and weeks to come.
1. Make sure your bills are caught up.
Many creditors, including your mortgage company, your landlord, or your utility providers, are promising not to cut off services or begin eviction procedures in the middle of this crisis, even if you can't pay your bills. While that's great news for people who are struggling financially right now, it doesn't mean that you can get away with never paying those bills. Many providers are asking for full payment in three months. In the case of your mortgage company or other lenders, they may simply add on interest as you defer payments. Use your stimulus payment to keep your rent and utilities caught up, if at all possible.
2. Take care of immediate, emergency expenses.
Your car broke down in the middle of the coronavirus crisis--and getting repairs is a challenge. You need to feed your family, and the cabinets are running lower than you planned. Perhaps you have an unexpected home repair expense or must figure out how to handle medical costs. Your stimulus check can help you pay for many of those expenses without needing to put them on a credit card or take out a personal loan.
3. Set the money aside in savings.
If you have a current source of income, you may not have an immediate need for your stimulus check. However, that does not mean that you won't have a need for those funds in the future, especially as the coronavirus situation continues to create economic uncertainty. Even hospital workers have experienced layoffs and furloughs in the midst of the coronavirus crisis. Having those funds on hand can make it easier for you to manage your finances even if you do face a layoff--and give you the means to support yourself and your family while you decide what to do next. Ideally, you should aim for at least six months' living expenses in savings, just in case an emergency arises.
Americans who are relatively comfortable in their current source of income--and who already have a solid savings account in place--may choose to invest their stimulus checks, rather than simply holding on to them. Look for a high-yield investment option that will allow you to experience substantial returns on your investment, and plan to wait it out long-term as the economy slowly recovers from the current situation.
5. Pay for an expensive "want."
Once you have covered the other scenarios--boosting your savings account; paying off essentials; handling any emergency expenses--consider what it is that you've been putting off buying or that you need a little extra help funding. You might, for example, choose to use your stimulus payment to help fund a vacation, or to pay for a home upgrade that you've been putting off. Take a look at those things that you normally have to save for--and that you would be saving for anyway--and put your stimulus check toward them.
For many Americans, the stimulus payment is a much-needed dose of financial relief. For others, it's an opportunity. Look for a way to use your stimulus check wisely, preparing your family for potential problems as well as setting yourself up for eventual financial success.