The unprecedented pandemic has caused many Americans to spiral into a financial panic. Thanks to the $2 trillion stimulus bill passed in March, many Americans will receive a one-time cash payment to help relieve some of the economic impacts of the Coronavirus shutdown. However, with the news of this relief came many questions — Who qualifies? How will they get it? And what are the best ways to put this money to use? The good news is that most citizens are eligible for a check of up to $1,200, with married couples getting up to $2,400, and families getting an additional $500 per child. But once you receive your money, then what?
First, perform a financial health check to evaluate your current financial situation. Then you are ready to consider which of the options below makes the most sense for you.
If you need the essentials
This pandemic has, unfortunately, led to layoffs and furloughs for many working Americans. If you are worried about paying your monthly bills, use your stimulus check to take care of the essentials that keep you healthy and safe: food, medication, utilities, insurance, etc. While housing is obviously also an essential, explore your options before allocating your money to your mortgage or rent. Many financial institutions are offering support via relief loan options, payment deferments, skip-a-payment programs, loan extensions, credit limit increases, and more. If you’re a member, be sure to visit your local credit union to see how they can support you during this time of financial uncertainty.
If your essentials are covered, build your emergency fund
COVID-19 is a bold reminder that the future is unpredictable. Nearly one-in-four Americans have no emergency savings. If your essentials are covered, consider using this money to build your emergency savings account for any unexpected setbacks that may occur in the future. It is advised to save up to 3-6 months of regular expenses within your emergency fund. Whether you already have an emergency savings account or you are just beginning, any little bit helps. Unfortunately, there is no clear end in sight for this current pandemic so the more you can put away now the better off you will be.
If you have sufficient savings, look at your debt
Making extra payments to pay down your debt is rarely a bad idea. Prioritize your debt from high interest to low interest and evaluate what option would benefit most from an extra payment. Can you pay something off? Can you lower your minimum monthly payment or lower your monthly interest charge? These questions can help you choose where to place these funds. Even if your debt has lower interest rates, keep this in mind: no debt is better than any debt.
If you are financially secure, give back
While you may find yourself in a financially secure position, many others are struggling to get through this challenging time. This is a time where communities need to come together to support one another. There are many organizations, charities and businesses calling for help right now.
When deciding where to give back, a good place to start is by supporting the local businesses in your community that you value. Simply buying a gift card or taking your bike in for a tune-up could have an immediate impact on a struggling independent shop and help them stay in business.
There is never a bad time to support a nonprofit. Just like other organizations, charities are struggling. Donating to nonprofits that are working overtime to provide relief to those impacted by Covid-19 is a great place to start, but many other associations not tied to this crisis are also in serious need of help. To find a legitimate nonprofit in need visit mtnonprofit.org.
This one-time payment may not be enough to relieve all of your financial stress, so if you are still struggling to stay afloat, reach out to your credit union and learn about the ways they can support you and your families during this time.