Stimulus checks promised in the Coronavirus Aid, Relief and Economic Security (CARES) Act are starting to land in checking accounts and mailboxes around the country.
Some of you may be wondering: What is the best way to use this money?
Make sure you can afford to cover your basics. Americans are out of work and some are still waiting for their unemployment to kick in. We agree it’s best not to make any long-term plans for this money until you feel that your everyday expenses are covered.
Emergency funds should be large enough to cover 3-6 months’ worth of living expenses. If you already have an emergency fund, it may have taken a hit during this time. If you don’t have an emergency fund, or your fund isn’t large enough to cover several months without a steady income, you may want to use some of the stimulus money to build it up for the months ahead.
Using some of your stimulus checks to pay off high-interest debt would be a great way to get a guaranteed return on the money, says Chris Chen, of Insight Financial Strategists in Newton, Mass. This advice only applies to credit cards and other private, high-interest loans. The federal government put a 6-month freeze on most student loan debts, so they should not be as high a priority right now.
It can be a good idea to use some of the stimulus money to add to your Stark Federal savings account if you feel good about the status of your debt and emergency fund.
The money in your savings can be used to cover long-term financial goals, such as funding a dream vacation or covering the down payment on a new home.
Consider all your options before choosing how to spend your stimulus money. If you need further assistance, feel free to reach out to us.
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