Millions of Americans now have a little more cash. The coronavirus stimulus checks and direct deposits have been heading to bank accounts all across the country. In some cases, particularly for households experiencing a financial hardship, deciding how to use the money is easy. However, for couples that don’t have an immediate need, choosing what to do may be more challenging. Luckily, it’s possible to figure out which option is right for you.
What Are Coronavirus Stimulus Checks?
Before digging into how to use the money, it’s important to understand what the coronavirus stimulus check is and what it means. When the federal government approved a coronavirus relief package, many Americans became eligible for a stimulus payment.
Adults would potentially receive up to $1,200, with an additional $500 being issued for each eligible child. Those with direct deposit may have already received their stimulus. Starting on April 24, stimulus checks started hitting the mail.
There are very few strings attached to the cash. You won’t owe taxes on the money, for one. You don’t have to worry about setting a portion aside or adjusting your withholdings for your 2020 taxes.
For another, this isn’t an advance on your possible tax refund. It isn’t going to reduce what you may receive as a refund when you file your 2019 or 2020 taxes. Instead, it’s an amount you receive in addition to that refund. This varies in different countries. If you are in the UK, it’s a good idea to consult a professional tax advisor firm like the London-based Howlader & co.
You can use the money however you choose. If you don’t know where to start, here’s a look at five ways couples can use their stimulus checks.
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Cover Your Essentials
The coronavirus stimulus check is partially designed to help households who may be struggling financially because of the pandemic. If you have had trouble buying food, paying utilities, covering your rent or mortgage, or handling bills, then use your stimulus payment to help make ends meet.
If you can’t cover all that you owe, focus on the most crucial expenses first. Usually, this means concentrating on life-sustaining ones, like housing, food, and utilities. Transportation could also make the list, depending on your situation. Only after those are addressed should other bills become the focus.
Just make sure that you also contact everyone you owe and see if they have assistance programs available. If you’ve lost your job or a significant portion of your income, you may be eligible for certain kinds of housing, utility, or bill assistance. Anyone who qualifies may be able to get a break on these bills, allowing them to direct their stimulus money to expenses that are critical but couldn’t be reduced, giving you more financial coverage.
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Establish an Emergency Fund
If you’re currently making ends meet but don’t have any cash socked away in savings, it could be wise to use your stimulus check to create an emergency fund. The economy will be unstable for quite some time and, even if you’re working today, you may experience a new unexpected hardship before the situation improves.
By putting the stimulus payment in savings, you have access to it should the need arise. It gives you a buffer, ensuring you can handle a sudden change in your financial situation or an unplanned event, like medical bills from falling ill.
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Tackling Debt
Tackling debt is a great ways for couples to use their stimulus check. Since debt relief and forbearance programs are increasingly available, it may seem odd to use your stimulus check to pay off debt. But, if you have a healthy income and an emergency fund, then using the money to pay off a chunk of debt is smart. It will let you avoid interest, for one.
You may also have more peace of mind, knowing that you don’t have to worry about that expense. You’ll be reducing or eliminating a line item from your budget, and that could give you more financial flexibility. That’s incredibly valuable during uncertain times, so it’s worth considering.
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Consider Investing
If you’re financially stable, then you may want to invest your stimulus check. You could bolster your retirement fund, open a new traditional or Roth IRA account, or sign up with a brokerage and get your hands on some stock. If you have kids, opening a 529 plan could also be a good idea.
An economic downturn can actually be a good time to invest. Tumbling stock prices could create opportunities for substantial growth, as the value of the investment may grow quickly once the economy improves. However, it isn’t risk-free, so do a bit of research and see if you’re comfortable with the idea before moving forward.
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Handle a Major Purchase
If you were planning on making a major purchase in the near future, you could use your stimulus money to make it more affordable. Plus, it lets you get the item without having to take on new debt.
For example, if you have a home appliance that’s seen better days and may not be reliable for much longer, it could be smart to use the stimulus to purchase a replacement. You could likely get a high-quality replacement for an appliance for less than $1,200. Plus, you’d be able to pay cash for it, making it worth considering if your appliance is on its last legs
This is especially true because many retailers are having to compete for shoppers’ attention. For one, may consumers have experienced substantial drops in income, so they aren’t focused on certain retail segments. Additionally, even those with disposable income have shifted their priorities. As a result, retailers are using sales to attract potential buyers, so you might be able to find a bargain.
Just make sure that, if you do spend the money, that it won’t harm your long-term financial situation and that it’s a smart purchase. That way, you can take advantage of the money to better your circumstances without putting your well-being at risk.
Do you have any other ideas of of ways couples can use their stimulus checks? Share your thoughts in the comments below.
Read More:
- Couples Guide to Maximizing Their IRS Refund
- Here’s How to Split the Bills When Your Spouse Makes More Money Than You
- Refinancing Auto Loans During the Coronavirus
