The US Treasury Department started to distribute stimulus checks as a part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). If you are one of the lucky ones to have already received your stimulus via direct deposit into your bank account you may be asking yourself, “What should I do with my stimulus check?”
The stimulus checks were provided to give Americans some relief amid the economic downturn that has occurred during the Coronavirus crisis. Many Americans have lost their jobs or have been laid off. The stock market decline lead to decreases in the value of investment accounts for millions of Americans, many of whom are retirees and depend on regular distributions from retirement accounts to supplement Social Security.
Times like these remind us that sound financial planning can greatly benefit people in times of trial. We do our best to help our clients plan for these types of events so that hopefully, when they come, they will be prepared financially. Whether you personally felt well prepared for this economic downturn or not, the stimulus check that you receive should help you to weather the storm and prepare for future storms that may come.
What Should You do with Your Stimulus Check?
- Pay Bills
If you, like many Americans, are struggling to pay your bills right now, you can use your stimulus check to help you cover those bills and avoid going into debt. We encourage all our clients to do their best to avoid debt. Going into debt can put a serious roadblock on the path to reaching your goals.
That being said, this is an unprecedented global crisis. All the rules are being challenged right now. If you are having trouble paying your bills and covering daily expenses, do whatever it takes to keep food on the table and a roof over your head. There are lots of programs to provide relief and we strongly encourage you to investigate them and assess whether they will work for you or not. We are happy to discuss options with you as well. Keep in mind that all relief options are not equal, and all aspects should be thoroughly vetted before you sign up for mortgage or auto relief or any other debt forgiveness program. They are not always as good as they seem at the outset.
- Build your Emergency Fund
If you are currently able to pay all your regular expenses through income or other resources, that is great news! It always feels good to be financially stable in a time of economic crisis. For you, now might be the time to consider starting or adding to an emergency fund. We strongly encourage all our clients to have an emergency fund that would cover 3-6 months of your living expenses. This money could help you if you lose your job, experience extended illness, or have an unexpected expense.
Right now, there is no telling how many people will get seriously ill or lose their jobs. We have no way of knowing when all of this will end. Having an adequate emergency fund in place could help you if you need it down the road. At minimum, it could offer you some much needed peace of mind that you would be able to cover expenses in the future if your current situation were to change.
- Donate to Charity
If you are currently able to cover you regular expenses and you have an adequate emergency fund, you might consider donating some or all your stimulus check to charity. There are many local, national, and global organizations who are doing their part to make sure that those in need are cared for during this difficult time. They cannot do it on their own. They need lots of support from generous individuals who are willing to help.
We know that many of our clients are generous people who give both time and money to many organizations. Right now, giving time is a bit of a challenge since many organizations are limiting the number of volunteers who can work at their sites to enhance safety. They are still in desperate need of financial contributions. With the numbers of unemployed Americans steadily increasing, many non-profit organizations are helping more people than ever before. Using your stimulus check to help those in need could make a big impact.
We can get through this together
It seems that things are changing daily as this global crisis unfolds. There are many things that we cannot control. Keep in mind that we are here for you and we are willing to help you navigate the challenging financial decisions that you might be facing. We are happy to discuss your stimulus check and the best options for you. If you are facing deeper economic hardship, please call us and we will help you to determine some possible solutions and help you to decide the best course of action for you.
If you have a friend or a family member who could use some help navigating a challenging financial situation, we are here for them as well. Have them give us a call, we are happy to answer any questions that they might have.
We know that this time is challenging but, we can get through it together.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
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