Smart Ways to Make the Most of Your Stimulus Check

If you’re like millions of Americans around the country, then you’ve probably received a $1,200 check from the government. (If you filed taxes jointly with your spouse, then you could be getting up to double that.) Or maybe you’re waiting on yours to be sent out and tracking it via the new IRS tool.

Regardless, there is or will be a helpful boost in your bank account if you fall within the requirements. There are multiple ways to use it depending on your unique situation. For some, it may involve putting your check toward rent or putting food on the table, especially as unemployment rates rise and the government struggles to keep up.

If you’re fortunate enough to have breathing room, here are eight ways to responsibly spend your stimulus check.

Bulk Up Your Savings Account

This might be one of the first options to consider. By putting your stimulus check in an interest-bearing savings account, it ensures that it’s safe and will keep earning you extra money. As a member of a credit union, it also means higher savings rates than if you kept your money with a traditional bank.

Invest It Wisely

Investing your stimulus check means the potential to significantly grow your $1,200. With any form of investing there are risks involved, so keep a watchful eye on the market. 

Low-risk investments like a certificate of deposit, or CD, have higher rates than a standard savings account, but you won’t have much access to your money once you put it in. CDs are federally insured with a fixed interest rate and maturity date. Credit unions offer share certificates that are insured through the National Credit Union Administration.

You could also look into investing in stocks. With stock prices down significantly due to the pandemic, now might be a good time to buy. This is still a bit of a risky option, however, as the market is extra volatile due to the Coronavirus. Buying shares of Netflix or Zoom seem like a good idea on paper, but as things slowly return to normal, shares of these companies may not go where you expect them to. MarketWatch has tips for buying and selling during the pandemic.

Pay Toward Your Mortgage

Chipping away at your mortgage can be tedious. It can also be a huge financial hit each month. With an extra $1,200 in your account, paying toward your mortgage isn’t a bad idea and may take some financial stress off your shoulders. Then again, with interest rates at their lowest in years, it may make more sense to put that money toward refinancing. If your mortgage is with one of Tampa Bay’s credit unions, give them a call to determine the best strategy.

Take A Bite Out Of Your Auto Loan

Similar to a mortgage, paying off a car can mean a significant amount of money leaving your account each month. Your car payment is likely significantly less than your mortgage, and paying off your car’s balance first could be a good strategy. Tackling your debt starting with the smallest is known as the debt snowball payment strategy and helps motivate you to pay off the rest of your debt. A $1,200 head start on paying off your car certainly isn’t a bad motivator toward becoming debt-free.

Reinforce Your Retirement Fund

Financial experts often say to “pay yourself first.” Ensuring your financial future by paying into a 401(k) or a Roth IRA has its benefits.

A 401(k) is a pretty reliable choice, especially if it includes an employer match program. The downside is that they often require a minimum contribution and may have fees. Meanwhile, a Roth IRA can be set up on your own, with a wide array of investment options. Contribution limits are lower, however, and there isn’t an employer match to take advantage of.

Investopedia put together a comprehensive guide to help you decide. Many of Tampa Bay’s credit unions have retirement advisors who can also help.

Pay Down Credit Card Balances

Consider partially paying off your credit card debt. Balances on a credit card are typically the most “expensive” type of debt to carry as it can snowball with each missed or delayed payment. By tackling the payments one by one, you’ll be on your way to managing your debt. An extra $1,200 can make a significant dent in your credit card balance. Your local credit union has plenty of tools and resources to help you tackle, or consolidate, credit card debt.

Create An Emergency Fund

Sometimes things happen. Things out of your control could mean you fall into financial troubles. That’s why it’s important to have a safety net in case things go south. In the current pandemic, it’s more crucial than ever to have money put aside as the economy continues to struggle. If you don’t have an existing emergency fund, now is the perfect time to start one with that extra $1200.

Donate To A Worthy Cause

If you’re financially sound, consider donating that extra “surprise” from the government to someone who desperately needs it. Contact one of Tampa Bay’s many food banks or charitable organizations to ensure the money gets to the people who need it most. Or if you’re interested in donating to a national or global charity helping victims of the pandemic, consider this list of worthy choices from Forbes.

Whatever path (or two) you decide to go down, you can feel good about putting that extra money to good use. For expert guidance, look to the helpful folks at one of the community credit unions in Tampa Bay.