The stimulus checks promised in the Coronavirus Aid, Relief and Economic Security (CARES) Act are starting to arrive. The $1,200 stimulus check granted to most middle-class adults is a welcome relief during these financially trying times.
You may be wondering: What is the best way to use this money?
We want to help you determine the most financially responsible course of action to take with your San Antonio stimulus check. Therefore we have a list of advice and tips from financial experts and advisers on how to use this money.
Cover your basic living expenses
First and foremost, make sure you can afford to cover your basic necessities. With millions of Americans out of work and many still waiting for their unemployment insurance to kick in, people are struggling to put food on the table. It’s best not to make any long-term plans for stimulus money until you can cover everyday expenses.
Charlie Bolognino, CFP and owner of Side-by-Side Financial Planning in Plymouth, Minn., says this step may necessitate creating a new budget that fits the times. With unique spending priorities in place, an absent or diminished income, and many expenses, like subscriptions and entertainment costs, not being relevant any longer, it can be helpful to reconfigure an existing budget to better suit present needs. As always, prioritize your basic necessities such as food and critical bills.
Build up your emergency fund with your stimulus check
If you’ve already got your basic needs covered, start looking at long-term targets for your stimulus money.
“I would immediately place this money in my emergency fund account,” says Jovan Johnson, CEO of Piece of Wealth Planning in Atlanta.
Emergency funds should ideally be robust enough to cover 3-6 months’ worth of living expenses. If you already have an emergency fund, it may have been depleted during the pandemic and need some replenishing. If you don’t have an emergency fund, or it isn’t large enough to cover several months without an income, then you may want to use some of the stimulus money to build it up so you have a cushion to fall back on during lean times that are likely to come in the months ahead.
Pay down high-interest debts
According to the Federal Reserve Bank, Americans owed a collective $930 billion in credit card debt during the fourth quarter of 2019. 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 government put a six-month freeze on most student loans, so they aren’t as high a priority right now.
Boost your savings with your stimulus check
If your emergency fund is full and you’ve made headway on your debt, it can be a good idea to use some of your San Antonio stimulus checks to add to your United Texas savings account. The money can cover long-term financial goals, like funding a dream vacation or covering the down payment on a home.
Consider all your options before choosing how to spend your stimulus money. In all likelihood, this will be a one-time payment received during the pandemic. If you need further assistance, please contact us. We’ll be happy to help you maintain financial stability during these uncertain times.
Your Turn: How are you spending your San Antonio stimulus check? Tell us about it in the comments.
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