The first 2020 stimulus checks should start to arrive around the middle of April, and eligible US taxpayers may receive up to $1,200 from the federal government as part of a $2 trillion relief package. As many as nine in 10 US households may qualify to receive an “economic impact payment,” as the IRS calls it, to ease the economic blow caused by the Coronavirus pandemic.
Let’s talk about how to spend your stimulus check:
Take care of your immediate needs
This includes food, monthly bills and your rent or mortgage payment. Take into consideration that many jurisdictions and utility companies are offering relief due to the outbreak. See which programs you can take advantage of, then allocate funds accordingly.
Pay your taxes
The deadline for filing and paying income taxes has been pushed back to July 15. Those who haven’t filed, and will owe the government money, could use the stimulus check to cover their tax payment. If you haven’t already saved for federal and state income taxes and are facing financial hardship, consider giving the money right back to the government.
Reduce your debt
One way to secure your financial future is to reduce your debt. A significant payment made to pay down a credit card and loan will help reduce the amount of interest paid on an account carrying a balance. The less interest you have to pay, the more funds you’ll have available in the future.
Start or add to an existing emergency fund
It can’t be stressed enough how important it is to have an emergency fund. As this outbreak shows, the world can change very quickly. The fund should be equal to the amount of money spent on expenses for three to six months. While the $1,200 will likely not cover that entire amount, it can be used as a starting point. A simple savings account can be used to keep the money safe and it will gain a bit of interest over time.