A lot of folks just got a stimulus check in the mail. If you are one of them and you’re wondering how you should spend that new found money here are a few ideas.
Do
1-Pay outstanding bills. A lot of people are unemployed or underemployed right now. If you have any outstanding bills (mortgage, utilities etc.) paying them off (or paying them down, if you can’t pay them in full) is a prudent way to spend your stimulus.
2-Pay this month’s bills. Pay all this month’s bills. If you have concerns about how you’ll be able to pay next month’s bills (and have money left over) you might want to pay those too for the peace of mind.
3-Pay off debt. If you’re caught up with all your bills, pay off your debt. If you’re working a snowball, you’ll know where to start. If you’re not, I’d suggest taking a look at this post outlining how to start paying off debt. If you’re paying off student loan debt and you can continue paying it off, pay if off! Don’t be lured by the idea of forbearance or low interest rates. The longer you put them on “hold” the longer it will take you to pay them off. Get rid of them!
4-Save it. Interest rates are low, but that doesn’t mean that saving is a bad idea. A bird in the hand is worth two in the bush, right? We have a “bricks and mortar” bank and we also bank online. When we have “extra” money, I electronically transfer it directly into our online savings account.
5-Invest it. Put all or some of your stimulus in your retirement account. I’d suggest your Roth IRA. If you don’t have a Roth, open one! It’s not hard. I was able to open a Roth with our online bank, Ally a few years ago in about 10 minutes. I don’t have any “fancy” investing suggestions, but I do recommend you invest in something you understand.
6-Share it with those in need. It’s no surprise that a lot of people are really struggling right now. I’m sure most of us know someone who could use a helping hand. If you don’t know someone, I’d suggest supporting local charities, non-profits and shelters. We love donating to local shelters. Not sure what to donate? Cash is King, or check out this post for more ideas (best yet, call and ask if there’s anything your local shelter really needs).
Don’t
1-Invest in “fancy” investment strategies-If you feel comfortable investing in single stocks, feel free. But if you’re a newer investor don’t go investing all your stimulus in GameStop because you saw a tweet about somebody making their millions that way!
2-Buy stuff you don’t need cause it’s “free money.” A lot of people already spent their stimulus buying stuff they don’t need. I’m not telling you what to do with your money, but if you wouldn’t buy “it” with your hard earned cash, don’t buy “it” with your stimulus.
3-Put a “down-payment” on something. What’s even worse than buying something you don’t need with your stimulus? Buying something you don’t need and also can’t afford. i.e. leasing or financing something you can’t afford to buy outright and using your stimulus as a, “down payment.”