How to Spend Your Stimulus Check | 7 Ways to Optimize Your Stimulus Money!

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Trying to figure out how to spend your stimulus check to optimize the stimulus money? I’ve got 7 ideas that I think will help you protect yourself and get ahead, no matter where you’re starting from.

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If you’re searching for how to spend your stimulus check, you’re in one of two boats:

1. You’ve got so many financial obligations you’re not sure what to prioritize.
2. You’re not suffering but you want to know the best way to optimize your stimulus money.

No matter which boat you’re sailing you’re gonna get your answer in this video.

So what’s the deal with this stimulus check?

• American adults who filed a 2018 or 2019 tax return will get up to $1200 each plus $500 per child under the age of 17.
• Income limitations do apply.
• The stimulus money is tax-free, you won’t owe income taxes on it next year nor will it impact your tax return.

If you have any other questions about the stimulus check, let me know in the comments.

And here’s a massive Google Doc with financial resources for those impacted financially by coronavirus: https://www.themoneymanual.com/coronavirus-money-guide/ 

Now the big question:

How Should You Spend Your Stimulus Money?

There’s an order of operations with seven steps to go down, and where you fall will determine where your money is best spent.

1. Food 

Your first priority should be putting food on your table. If you’ve lost your income, can’t get unemployment, and have expended all your food bank options then use this money to buy food. Especially if you have dietary restrictions that prevent you from fully utilizing food banks.

Don’t be too proud to accept help, food banks can allow you to use your stimulus check in other places you need it.

2. Shelter 

Your second priority is to maintain a roof over your head. That means paying your mortgage or rent and basic utilities. 

Banks and landlords are working with people to waive late fees but you will still owe that money so if you have food covered and/ or a little money coming in through the form of unemployment or a side hustle, pay your mortgage or rent.

Did you know that almost half of all rentals are owned by individual investors? That means if you don’t pay your rent you may be inhibiting another family from putting food on their table.

If you live in a climate where electric bills are about to rise, #Florida, then sign up for fixed-rate billing, also known as budget billing. It’ll lower your bill through the summer and give you the chance to stay current on your bills.

Try to stay as current as possible on your bills. There may not be late fees but many companies won’t waive payments so you’ll owe it eventually and the further you get behind the harder it is to get current.

3. Other Bills 

When deciding what other bills you should pay, including car, internet, phone, etc. list them in order of importance.

Call to sign up for any assistance programs that are available from the company but more importantly, decide which expenses you can eliminate for the time being.

4. Emergency Fund 

If you’ve got enough money coming in to cover the above expenses, now you can afford to save in your emergency fund.

The financial crisis is going to get worse before it gets better. If you don’t need the money now you should anticipate needing it in the future.

Save at least $500, preferably up to six months of your bare-bones budget. Save it in a separate bank account like Ally or Radius, don’t save the info in your computer and don’t carry the debit card.

This is where the majority of people will and should stop. It might feel like a cop-out but I promise it’s not. $1,200 doesn’t go that far.

5. High-Interest Debt 

If you have a fully-funded emergency fund and you want to optimize your stimulus money, then pay off any high-interest debt. That includes credit cards and personal loans but really anything over 6%-7%.

This could be a good time to make Federal student loan payments but use your discretion. Interest isn’t compounding on them right now so you can make a bigger impact with every payment but you’re not losing anything by not.

I don’t think you should use this money to pay off your mortgage early. If you have a job that allows you to budget for extra mortgage payments that’s one thing but this particular stimulus check can be used in better ways.

6. Retirement 

Your next option would be to put some or all of your stimulus payment into your retirement account, specifically, your Roth IRA.

In your 401k contributions are made before taxes are taken out and then the government charges taxes when you make withdrawals. Alternatively, contributions to a Roth IRA are invested after taxes have been taken out so when you withdraw from it in retirement you’ll owe no taxes then.

Because your stimulus check is tax-free, investing it in your Roth IRA is like putting pre-tax dollars into it. And you’re investing in the stock market which bolsters the economy, the main purpose of the stimulus bill.

If you’re already planning to max out your Roth IRA for 2020 there’s probably no need to use this money here. Just keep doing what you’re doing and hopefully, you’ll move on to number seven.

7. Give 

If you have at least $500 in your emergency fund then you’re doing better than 63% of people in America.

So if you’ve got all these other steps covered, there’s no better use of your money than giving it away. There are three ways to make you giving the most effective:

• Give to individuals: Find the needs of people around you and do what you can to meet them.
• Give to local charities: Give to charities that make a direct impact on individuals in your community that you may not otherwise be able to serve.
• Invest some in local businesses: Buy gift cards to local businesses you believe play a vital role in your area.

You can also see if your city has a utility assistance program where you can make a donation to your utility company and they’ll use the money to help people in need.

Coming up I’m going to be posting videos about how to save money and spend less now so you can improve your finances in the future so if you want more info like that subscribe, I’ll be putting out a few videos a week until we’re all back on our feet.

Hang out with me on Instagram: https://www.instagram.com/modernfrugality

DISCLAIMER: This video is for educational purposes only. I am not a financial advisor. In order to make the best financial decision for you and your family, you still need to conduct your own research and seek the advice of a licensed professional if necessary.  Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Don’t make any decisions without doing your own research!