If you make less than $99,000 (or $198,000 if you’re married), coronavirus relief money is coming your way. President Trump signed the CARES Act into law on March 27, which includes stimulus checks for millions of Americans.
The maximum amount you can receive is $1,200 per adult (or $2,400 for married couples) plus $500 per child under age 17. Individuals making over $75,000 or couples making over $150,000 will see their check phased out by 5 cents for every dollar they earn over those amounts.
It could be several weeks — possibly over a month — before you receive your stimulus money, but now’s a good time to start planning how you’ll use that cash so you make the best of it.
Of course, everyone’s financial situation is different, but here are four key things to consider when deciding how to spend your coronavirus relief check.
Cover Your Needs First
If there were ever a time to prioritize needs over wants, this is it. This is especially important if you’ve lost income due to layoffs, furloughs, reduced hours or slow business. Your stimulus money should go toward making sure you have a roof over your head and food on the table.
Create a bare-bones budget and total up the cost of your absolute essential expenses. Then look at how much money you have in your checking and savings accounts — in addition to your pending stimulus check — to get a good picture of how long your money will stretch.
However, don’t wait until you’re in dire financial straits to seek assistance with your basic needs.
“Reach out now if you can foresee problems [paying bills],” said Chris Preston, vice president of corporate relations at United Way Worldwide.
Increase Your Savings
Let’s say you’re still working and bringing in enough money to cover your essential needs. Look to using your stimulus check to bolster your emergency fund.
No one can predict how long this pandemic will last. Less than a month of shelter-at-home advisories has forced industries to change how they do business, and many have all but shut down. The job you have today may not be guaranteed if this crisis continues.
While the typical advice is to have at least three months worth of living expenses in an emergency fund, you might want to bump that to at least six months. Your emergency fund should help you feel financially secure.
Separate your emergency savings from your spending money. A high-yield savings account will earn interest while your money’s sitting in the bank.
Think About Your Future
If your needs are being covered and you have a robust emergency fund, consider spending the money you’ll get from the stimulus bill to set yourself up for a better financial future.
Taking a certification course could position you for a promotion or new job. Alternatively, you could use the money as seed capital to pursue an entrepreneurial path.
Making a dent in your debt or paying a large bill upfront rather than over time could help you save money in the long run.
You also might want to think about using your stimulus money to cover upfront expenses that’ll help you save money over time. That could mean buying gardening supplies so you can grow your own produce and cut costs on groceries. Or maybe you want to buy reusable products like cloth diapers or a bidet attachment so you can stop buying throw-away goods.
If you’re in a financially stable situation with a healthy emergency fund, another good use of your stimulus money could be to help others.
Use the extra cash to help a family member or friend in need or donate to a reputable charity. Or you could spend your money at local businesses and restaurants — whether that’s through online orders or purchasing gift cards for future in-person visits.
You don’t have to have a financial surplus, however, to find ways to help others. Donating blood, going grocery shopping for an elderly neighbor or troubleshooting teleworking tech for a friend are all ways you can be of service without spending money.
Feeling overwhelmed? Create a budget that works for you with our budgeting bootcamp!
Nicole Dow is a senior writer at Codetic.