The $2 trillion CARES Act, signed by President Donald Trump in late March, provides payments of up to $1,200 for singles $2,400 for couples, along with $500 for eligible children, and is based on 2018 or 2019 tax returns. As the first of the checks begin to trickle in, prompting plenty of buzz on social media, now is the perfect time to think about how you plan to spend the money.
It is expected that most American households are eligible for a stimulus check, though it couple take months for paper checks to be received. The Internal Revenue Service (IRS) has created several online tools – the non-filers tool and the "Get My Payment" now tool – to help Americans provide their banking information and check the status of their payment.
A new poll from Gallup conducted between April 6 through April 12, just before the first of the payouts were sent, found that 35 percent of Americans planned to use the money to pay bills, according to the Washington Post. Another 16 percent anticipated spending it on essential items, while 29 percent intended to invest it. Keep scrolling to see some ways you could spend your stimulus money.
Given that the stimulus money is meant to help keep Americans afloat amid the economic crisis brought on by the global pandemic, it's likely that many Americans will first use the money to pay for essentials. These essentials can include monthly bills, rent and mortgage, and groceries. For those still having to leave the house for work, these essentials could also include gas, car insurance, and other related expenses.
Pay your taxes
Americans who haven’t already done so can also use their stimulus payment, or a portion of the payment, to pay their taxes. While the deadline for taxes is typically in April, that date has since been pushed back as a result of the economic crises. Treasury Secretary Steven Mnuchin pushed back the filing deadline to pay 2019 income taxes to July 15.
Pay down debt
Americans can also make good use of their stimulus money by reducing their debt. While many lenders are offering relief measures right now, continuing to make payments will keep your interest down so you have to pay less in the future.
"It's important to understand that, although you may not have to make payments, interest could still accrue when your account is in forbearance," Rod Griffin, Experian's senior director of consumer education, said, according to Experian. "If it does, you will have to repay that interest, which could cause you to pay more over time. However, that may be a worthwhile compromise to protect your credit through this difficult period."
Bulk up your emergency fund
With unemployment levels reaching record highs, the coronavirus pandemic has shown just how important it is to have an emergency fund, and for those who are able to at the moment, adding to or starting an emergency fund with their stimulus payout may be a good idea. According to CNET, an emergency fund should be equal to the amount of money spent on expenses for three to six months. A savings account can be used to keep the money safe.
Spend it on a local business
With small businesses across the country struggling to remain afloat amid the crisis, you can lend a helping hand with your stimulus money. Instead of buying items through big box retailers and online chains, consider shopping locally. As Wirecutter points out, this can be done in a number of ways, even if local businesses are currently closed. Help support local restaurants by ordering takeout or order merchandise from your favorite small businesses online. Rather than hitting that big-box store or wholesale clubs for groceries, shop at your locally at local bakers and neighborhood grocers.
If your finances are in order and your job is secure, consider donating your stimulus money to those in need. There are a number of ways you can do this. Donations can be made to food banks and charities, which have seen a rise in demand amid the pandemic, hospitals, or even a cause that is close to your heart.
"If you've kept your job and have an adequate emergency fund, you might want to consider donating a portion of the stimulus check to help those who aren’t as fortunate as you," Doug Garrison, senior wealth adviser at Investec Wealth Strategies in Houston, Texas, told MarketWatch. "Times such as this call for compassion and solidarity."
Of course, people can also choose to use their stimulus money in non-essential ways. Given that we are currently experiencing a global pandemic, it's not completely out of the realm to imagine people needing a way to de-stress. This is where your stimulus money can come in handy. While a portion of the money can be put towards the above mentioned means, it can also be spent on a post-lockdown mini-vacation, clothes, and other activities to help keep you occupied as social distancing measures remain in effect.