Capitol Hill

An estimated 22 million people are unemployed now due to the coronavirus pandemic. The federal government is sending millions of Americans stimulus checks to help them during this crisis. Some people are wondering what they should do with their stimulus check.

The choice is yours. It really depends on your financial situation.

The economic impact of the coronavirus is real. And some states are having a problem processing unemployment claims to meet this huge demand. So having some extra cash in your hand really helps. For many people the answer to how to spend your stimulus check is simple. They might use these funds to pay rent, bills, and to buy groceries and other essentials.

On the other hand, some people are debating what to do with the money. I’ve spoken to a few people like this who were thinking of using it to pay down credit card debt. Is that the right answer? It really depends. Are you over-the-credit limit? Do you have any emergency savings? Less debt helps to reduce your monthly obligation. However, you must take a close look at your personal finances to determine if you should pay off high interest debt right now.

The Choice is Yours

Here’s my take if you don’t have to spend the money on essentials right now:

  1. Self-Reflection – Take a look at your complete financial picture right now. What are your expenses? What is your income? Do you anything that requires your immediate attention? If so, it’s an easy answer for those stimulus funds.
  2. Budget – Do you have a budget to stay on-track? If not, there’s no time like the present to create one to help you minimize expenses and achieve your financial goals.
  3. Save – The truth is we don’t know when this pandemic is going to end. And there is no guarantee you’ll have your job when it ends. So it’s very important to have an emergency savings account. It’s best to have at least six full months of your living expenses in savings. Now may be the perfect time to start building your savings. Having an emergency savings account helps to put you in a better position should something unexpected happen.
  4. Donate – With record breaking unemployment numbers, there are many people who need your help. On the flip side, some people say they are doing absolutely fine and they don’t need or want any stimulus money. If you can give, please consider donating a portion to an organization(s) who is working very hard to help others in need right now. Thank you!

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Photo by Andrew Bossi, Flickr