Americans are getting ready to receive a $1,200 stimulus check beginning in mid-April. For those of you who have been recently laid off, that money is likely to be used for essentials like paying rent.
However, if you’re lucky enough to still have a job, you might be wondering what you should do with this extra money. We’ve tallied some of the best options for what to do with your stimulus check.
20. Buy Essentials
The initial rush of people hoarding toilet paper and non-perishables is coming to and end because people hunkered down for the long-haul. However, stores are still barely able to restock essentials before they’re sold out again. A lot of people are still struggling to find basic products like meat, dairy, and eggs. So, it’s time to stock up.
There are also a lot of options for buying essentials that don’t require you to leave the house. Amazon Fresh has a grocery delivery service. Since restaurants are closed, a lot of produce and meat wholesalers are also trying to sell their good. Do a quick search online to see if there are wholesalers near you.
19. On Your Home
The more time you spend in your house, the more you begin to notice things you want to fix. Maybe your couch is uncomfortable, or your mattress could use an update. Luckily, Purple, Casper, and even Walmart sell memory foam mattresses that can be delivered to your house.
Maybe “comfort” goes beyond how you physically feel. Being more comfortable could be a process of buying things to make your living situation more enjoyable. It might be time to invest in a Smart TV. Or maybe it’s time to invest in a space heater or window air conditioner. Ask your family members what would make them feel more comfortable, too.
18. A Future Vacation
Most people have already canceled their plans for any summer vacation in 2020. However, a lot of airlines are now offering incredibly cheap flights as far ahead as 2021. We don’t know how long this crisis will last, so there ‘ always a chance you’re rolling the dice by booking a vacation. But if you push your bookings far enough down the line, it might be possible that it would work out. Just be sure to read cancellation policies carefully and consider purchasing travel insurance.
Alternately, you could just hold on to the cash and wait until you know it’s safe to travel again. If you’re still working from home, you might now actually need this $1,200 immediately. Using this as the beginning of a vacation fund can help pay for the trip of a lifetime. You could even pay for passports so that everyone can travel overseas. This would also give you something happy to look forward to in the future.
17. Pay Off Credit Card Debt
There are few things more glorious in life than unshackling yourself from debt. According to Bankrate, the average American has $90,460 of personal debt. It’s not likely that $1,200 will make you debt-free. However, a lot of people have credit cards with limits of $1,000 or less. So this could be a great time for you to pay off that card in full. Alternately, you could use the money to overpay on multiple cards. Both of these moves are likely to boost your credit score.
If you’re not sure which strategy to take, consider making a debt chart with something like Microsoft Excel or Google Sheets. Figure out which card is doing the most damage in terms of interest and monthly payments. Also consider applying for a zero-interest credit card, and doing a balance transfer. Once you have your debt consolidated in one place, it may be easier for you to make the monthly payments.
16. Prepare For In-House Care
Even if you’re doing everything to prevent yourself from getting sick, there’s still the possibility it may happen. We’re in a situation where no one is allowed to get a test or even go to the hospital until they’re in critical condition. So you should consider spending some of your money on items like masks, gloves, and cleaning supplies. If someone gets sick, make a list of items that will help keep the sick person quarantined and have a plan in place.
You might not be lucky enough to live in a large enough house where you can practice social distancing. The important thing to remember is that you need to take the necessary precautions to protect yourself and your family. Since reliable medications aren’t available yet, consider purchasing vitamins for boosting your immune system, like vitamin C, vitamin D or turkey tail mushrooms. Also consider purchasing humidifiers, which have been proven to help ease a dry cough.
15. Start An Emergency Fund
Now more than ever, we should understand how vital it is to have an emergency fund. Everyone should have enough money saved to pay for at least three to six months of expenses, because you never know when an emergency will happen. Before this crisis happened, most Americans had less than $1,000 saved. For some, saving money seems impossible if they are just barely living paycheck to paycheck. However, this $1,200 stimulus check might be an opportunity to change your saving habits.
If you still have a source of income and don’t need the $1,200 right away, the smartest thing to do with it might be to put it in your savings account. Even if you have your job at the moment, there’s always the chance you could get laid off unless you’re considered an essential worker. So, no matter what your current financial situation may be, it’s still wise to prepare for the future.
14. Buy Stocks
It’s no secret that the stock market has crashed to historic lows. However, our economy has gone through terrible crashes before. Seasoned investors see this as more of a Black Friday sale rather than the end of the economy. Many of these companies are going to survive, and are just experiencing temporary lows. Before the crisis we were in a bull market and our economy was very strong. Someday, the stock market will begin to rise again.
Before you invest, keep in mind that there are a lot of companies with uncertain futures. The last thing you want is to invest in a company hoping they’ll make a comeback only to see them go bankrupt. Always do your due diligence by reading their quarterly reports. Also check out Reddit, where fellow investors discuss news involving particular stocks.
13. Stockpile Cash
After The Great Depression, the FDIC was created to insure American’s money in case of another major crash. Bank accounts are insured up to $150,000. So for most people, there’s no need to rush to the bank to withdraw everything you own. However, if you were in the habit of going to the ATM on a weekly basis to withdraw spending money, this might be a good time for you to cash the $1,200 check instead. For some people, having physical cash helps them to keep track of their spending limit.
Having a stockpile of cash on hand has its downsides, though. You can’t transfer the money digitally to pay bills or use your debit card. It can also be less sanitary. Cash has a higher chance of containing germs or viruses since it’s been passed from person to person. A debit card, on the other hand, can be cleaned in a matter of seconds. Take some time to analyze your personal situation to figure out how much cash you need to keep on hand.
12. Pay Your Bills Early
If you’re in a position where you just barely pay your bills on time, the $1,200 could be an opportunity for you to get ahead of the game. Typically, credit cards and utility bills will send you an invoice two weeks to a month before your payment is due. You can pay these bills off early, and have the rest of the month to relax. Some companies will even allow you to extend your due date when you pay early. For example, if your car payment is $300 a month, paying $900 could push your new due date to three months from now. And most car insurance companies have a six-month premium that can be paid in full.
However, this doesn’t mean you should pay every bill early before the invoice is due. Most credit card companies will put extra payment towards the balance but still expect you to pay your minimum on the regular due date. So be careful and check the payment policies to ensure they will actually help you. Lastly, you could place that $1,200 into a checking account and set up automatic payments each month to give yourself peace of mind for a month or two.
11. Save For A Down Payment On A House
Unfortunately, when all of this is over, there are going to be a lot of people forced to sell their homes. Real estate experts are predicting that the housing market will begin to decline in price, and there might even be a crash of the housing market. But the good news is that first-time home buyers are going to have some great deals to choose from. Property owners are getting the most help from the government by having the option to put their mortgage on forbearance, while renters are still expected to owe their landlords a pile of debt.
Going forward, you might be considering buying a house. If you’ve never purchased a house before, look into FHA Loans, which are government-backed mortgages for first time home buyers. They only require a 3.5% down payment. On a $100,000 house, that’s only $3,500. So your $1,200 stimulus will actually put a decent dent into saving towards the goal.
10. Roth IRA
Want to retire a millionaire? Your best chance of doing that is to invest in a Roth IRA. If you’ve never heard of the Roth IRA before, you might want to take a second to watch a Graham Stephan video called “Becoming a Millionaire: Roth IRA vs 401K”. The differences between the two accounts are a bit complicated, and we don’t have enough time to go over all of it here in this article.
The most important thing to know is that if you’re still in your 20s, it’s possible for you to retire a millionaire if you save the maximum amount in your Roth IRA each year. Even if you’re already in your 30s, you can still save a huge chunk of money that will help you retire comfortably for the rest of your life. Obviously, it won’t be enough on its own, but this $1,200 check could potentially be the beginning of your journey to save for retirement.
9. Online Classes
Even though universities have closed their doors, it’s still possible to take online classes. If you’re a student, you may want to use your $1,200 to fund your educational expenses instead of taking out additional loans. And if you’ve been thinking about going back to school, this might be a great way to spend your new free time. Investing in your education is incredibly important if you have recently lost your job. Having a degree or certification will help to give you a competitive edge. County colleges have online certification programs in a variety of subjects, and many of them cost just a few hundred dollars.
Of course, there are plenty of options for taking online classes that have nothing to do with college accreditation. At the time this article was written, Rosetta Stone is having a sale where you can get lifelong membership access to 24 language softwares for $200. Once you have your login credentials, you can access Rosetta Stone on any device and even share with friends. Masterclass is also having a similar special where two annual memberships are $180, which give you access to all of their online classes. Both deals are perfect to split with a friend.
8. Upgrade Tech
Suggesting to buy a new computer right now might seem frivolous, but it can actually be a huge upgrade to your life. If you recently transitioned to working from home, you’ll have to get everything done on your personal laptop or desktop computer. There are plenty of people out there who relied on their work computer and have an older machine at home. Or, you might not even have a personal computer at all. Jobs that hire work-from-home positions always require your own computer with certain specs. This means that you aren’t even eligible to apply unless you have a newer laptop.
Aside from using technology for work, you want to communicate with your loved ones. Having the ability to video chat helps you feel less alone. If you don’t have a laptop or phone that can use Zoom, Skype, or Facetime, it’s time to get one. You could buy a brand new Macbook Air for $982 or save some money by browsing eBay for something secondhand. Yes, it’s expensive and would take up the majority of your stimulus check. However, if it will improve your lifestyle significantly, it might be worth it.
7. Help Friends and Family
No matter how difficult things may be, there’s always the chance someone you know is going through worse. Nearly everyone knows a friend or family member where $1,200 isn’t enough to help their financial situation. If you’re financially secure and $1,200 isn’t going to change your life, you might want to help the people you love.
Of course, at the end of the day, everyone needs to look out for themselves. And it’s not your responsibility to help someone who made poor life choices. However, try to have a good heart and make decisions you know will be best for your family. Even if you can’t give money, consider sharing resources instead.
6. DON’T Pay Down Student Loan Debt
When the $2 trillion stimulus bill was being evaluated, democrats wanted to add a section that forgave $30,000 of federal student loan debt for every American citizen. Sadly, republicans didn’t agree, so it was left out of the budget. Even though it didn’t make it into the bill, that doesn’t mean the chance is gone forever. Presidential candidate Joe Biden proposed a very similar plan to forgive student debt if he is elected. Only time will tell if this actually happens or not. However, it would be awful if you dumped your stimulus check into your student loans only to find out that you could have had it paid off for free anyway.
Obviously, we can’t always trust a promise a candidate makes on the campaign trail. However, there’s no denying that this problem is going to get worse before it gets better. With millions of people out of work, it’s going to be nearly impossible for some people to pay off their monthly student loan payments. Unlike consumer debt, student loans can’t be forgiven in a bankruptcy. If you’ve recently lost your job, switch over to income-based repayment, which should change your monthly amount due to $0. And if you’re still working, continue to pay your monthly bill without overpaying. Hopefully, we can all celebrate later if federal student loans are forgiven.
5. Donate To Charity
Pretty much everyone in the world is going through a hard time right now, so it might be difficult to imagine helping anyone else. But if you can spare it, consider donating to a charity. But don’t trust everything you see on the Internet. There are a lot of scams out there. If you want your money to go directly to emergency room doctors, contact your local hospital and see how you can help.
Even if you can’t spare a lot of money, you may be able to donate your time and money in more productive ways. For example, you might want to buy a sewing machine or 3D printer to make supplies for your local doctors.
4. Prepare For Future Job Interviews
If you’ve been laid off or furloughed recently, you’re going to have to go on job interviews once this is over. Preparing for an interview isn’t cheap, especially considering that you want to look your best. Considering that all salons and barber shops are closed right now, most of us are letting our hair grow wild and free while we lounge in sweatpants. Once this is all over, you’ll probably need new clothes, transportation, makeup, hair, and nails. Even if you’re being incredibly frugal, you need to set aside at least $100 to get this done.
You should always dress one step higher than the job you want. For example, if you have an interview to work at a company where people typically wear a button-down shirt and tie, go a step further and wear a suit. On the flip side, if you’re going on an interview at a food service position, wearing a suit would be overkill. It would be appropriate to wear a nice polo with khakis or blouse and slacks instead. The good news is that a lot of clothing stores are having big online sales right now to make up for their lack of foot traffic.
3. Enjoy Hobbies
With so many entertainment and shopping centers shut down, people are forced to stay at home. If you didn’t have any hobbies outside of work or travel, this is a painfully boring time. Watching Netflix is great, but sitting on the couch gets old. Even if you’re mildly curious about getting into a new hobby, you should indulge once you get your stimulus check. Remember that mental health is incredibly important right now, especially if you live alone. By having hobbies, it can help pass the time a lot faster. Remember that it’s okay to have fun even in this difficult time.
If you’ve always wanted to get into drawing, buy an art set. Want to get into online gaming? Maybe it’s time to splurge on a gaming PC. Buy whatever is going to help keep your spirits high during this dark time. You never know what amazing works of art could potentially come out of this crisis. Embrace your creative side, and make whatever you like. And if you want to read more books or indulge in fantasy, let your mind take you wherever you want to go. Having a hobby is incredibly healthy and will help keep you sane throughout this ordeal.
2. Start A Business
While you might not be able to start a business right now, you can still make plans for the future. For a lot of people, $1,200 is enough for them to buy the necessary licenses and materials for the startup they’ve always wanted. And if we continue to get stimulus checks, you might have a healthy nest egg ready to go once this is all over. Right now, there are so many businesses that are going to close. Once they’re gone, they’ll leave empty storefronts that can be an opportunity for new entrepreneurs to come in.
During this crisis, there are businesses who adapted and are still thriving. Restaurants who offered drive-thru and delivery services are still open, and so are the many retailers that offer online shipping. As a new business owner, you can analyze the new world and figure out what kinds of products and services people need. Even in a crisis there is opportunity. It may take months, or even more for you to start a new business, but that just might be the right amount of time to hit the ground running.
1. Save For Your Kids
Last but certainly not least is that you might want to save for your kids’ future. If you haven’t already paid for a life insurance policy, now might be a good time to start. As sad as this is to say, you need to start thinking about how your family would cope if something were to ever happen to you or your partner.
Even in the best-case scenario, it’s always nice and smart to put some money aside for your kids. One day, they might come to you and ask if they can join the soccer team, and you’ll have to pay for a uniform. Or, they might want to go to Disney World one day as well. Kids bring hope for the future, and they give us something to look forward to. So if you can afford to do it, put some money aside in a savings account for them.