Here’s What You Should Do with Your Government Stimulus Check

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Very soon, many Americans will be getting a direct deposit or check in the mail from the federal government as part of the CARES Act—the “Coronavirus Aid, Relief, and. Economic Security Act.”

This one-time payment is designed to help families cover costs during these tough economic times and allow some spending to help restart the economy.

So how much will you get and how should you use the money?

Let’s dive in and determine what this stimulus check means for you.

How Much You May Get

There are a few requirements that have to be met in order for you to get the stimulus check.

The first eligibility requirement is that you have to be a legal citizen.

The second is that you are not eligible if you’re a dependent that can be claimed on someone else’s tax return. That means teens being claimed on their parent’s tax return will not get $1,200.

Lastly, you cannot earn above a certain amount.

If you meet these requirements, you can expect an amount of $1,200 if you’re an individual tax filer. 

For married couples who file jointly, you get a $2,400 payment total ($1,200 each).

There is also an extra $500 per eligible child under the age of 17. An eligible child is determined by the same eligibility as the Child Tax Credit. 

The $1,200 starts to phase out when you hit the Adjusted Gross Income cap of $75,000 for single filers and $150,000 for married-filing-jointly filers. If you file as head of household, your stimulus starts to phase out at $112,500. 

These numbers are based on your 2019 tax return (the one you filed this year). If you haven’t filed your tax return yet this year, the 2018 tax return that you filed in 2019 will be used to determine your income eligibility.

For social security or disability income receives that don’t earn enough to file taxes, forms SSA-1099 and RRB-1099 will be used by the IRS to determine eligibility.

The Best Ways to Use Your Stimulus Check

Now that you know how much you’ll be getting, what’s the best way for you to use it?

Depending on where you are in life, how secure your job is, if you have an emergency fund already, and how much debt you have, you have some different options.

Like budgeting, this isn’t going to look the same for everyone. Consider your comfortability and the needs of others and choose the option—or options—that’s best for you.

Here are some great ways to use your stimulus check.

1. Create or Increase Your Emergency Fund

If you’re without an emergency fund, there is no better way to quickly build it than by putting your stimulus check toward it.

In fact, this may turn out to be the best way to use your stimulus money.

Not only are we not sure when the Coronavirus pandemic will end, but we don’t know how far-reaching the economic damage will be. Millions of Americans have filed for unemployment recently and this may be just the tip of the iceberg. 

There’s no better way to give yourself a quick boost than this stimulus money coming in.

No, it’s not going to last forever. Yes, there may be more money coming down the pipeline for Americans. Either way, using this money for an emergency fund

Even if you recently lost your job and are collecting unemployment, saving your stimulus check for the future can help you lengthen the time you can weather the storm.

If you’ve only been furloughed and are certain you will be getting your job back as the economy reopens, putting your check in savings, for now, can guarantee some peace of mind.

If you have your job still and know that it’s safe, using your stimulus money for your emergency fund is still a great use of the money—especially if your emergency savings are currently at zero.

Using your stimulus check to fund your emergency fund—whether you have one or not—is one of the best uses for the money. 

2. Cover New Gaps in Your Expenses

Another great way to use your emergency fund is to help out the potential boost you may need in some of your budgeted categories.

Some of your expenses may go down since we’re all quarantined. Eating out and gas for your car come to mind. 

However, other expenses like electricity and groceries may increase while you’re stuck at home.

Last month I spent almost $1,000 on groceries for a family of four simply because I was trying to make sure that I didn’t need to go to the grocery store. That’s way above our normal budget of around $450.

For this month, we’ve already surpassed our grocery budget for the same reason. I don’t want to have to leave the house—nor do I want to endanger someone else by getter my groceries delivered—until at least the end of April.

If you’re in the same position, your stimulus check is a great way to help cover these unexpected increases in your expenses.

3. Give it Away

If you’ve done what you need to do to manage your money well—whether in good or bad economic times—giving your money away to someone who needs it is a GREAT option.

During hard times like these, sticking together and helping to support those who are less fortunate is pretty much a necessity. 

There’s so much 

Imagine being the person giving $1,200 to someone who is struggling to buy food. Imagine being the person injecting a little relief—and maybe even some hope—into someone’s life.

If you know that you are not going to need your stimulus money, look around to see who might benefit from the money instead.

There’s no better feeling.

4. Pay Off Debt

There are a lot of finance folks (how about that alliteration!) that are suggesting you leave debt alone for now. A lot of this is due to the uncertain times we live in.

While I agree it can be a great idea to start paying only the minimums, like a lot of other things “personal finance,” it depends on you personally.

Is your emergency fund good? Are you comfortable with where you are? Do you have two incomes currently but would be ok if one of you lost a job?

There is no right answer to this. If you’re set, getting an extra $1,200 or more to put toward your debt can be a great thing. 

Even if you’re not financially set, step back, run some numbers, and see what paying off debt will do for you. Sometimes, paying off a debt will free up the money you need so that you are ok in a crisis. 

It’s also ok to not make the decision to pay off debt right now and let things play out first. In that case, you could put your money in a high-interest online savings account and leave it there until you make the choice.

Take a look at your individual situation and see what will work best for you with debt payoff.

5. Spend It

Yes, this is an option. Yes, I’m serious. 

It is ok to spend your stimulus money as long as you don’t need it elsewhere in your budget. 

In fact, I would almost encourage you to spend it on what you value if you’re already financially set.

Why? Simple.

Spending your money will actually help the economy start back up. In crazy times like these, where you spend your money can be just as important as spending it to start the economy back up.

That’s why it’s important to buy local. No, I’m not telling you to stop spending money at places like Target, Amazon, Costco, or other national chains. But I do want to encourage you to think about how you can help your community.

Now is the time to support your personal community like your favorite hole-in-the-wall restaurant or local eatery. As soon as they reopen, they’ll be depending on their loyal patrons to help them stay in business. You can even start this by ordering delivery now.

Look around in your community for small businesses that may be depending on a little bit of your spending to help them keep the doors open.

Do What Is Best For You

The bottom line is to do what’s best for you and those that depend on you.

There will be people that are kind of ok financially that will want to give some of their stimulus money away. There will also be people that are doing well financially that just don’t feel comfortable doing anything with the money except saving it for a rainy day.

No matter what you choose or where you’re at, you’ll get no judgment from me.

It’s important during times like this pandemic that we support and love each other no matter what. 

Meet your neighbors right where they’re at (while practicing social distancing!). Be the type of neighbor you wish you could have in tough times.

Use the stimulus money how you see fit, but I want to encourage you to think about others as well.

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Hey! I'm Tim.

I’m an expert budgeter, author, and Certified Financial Coach. My mission is to not only teach you money principles, but to teach you how to mold them to fit who you are and build the life you want. I don’t like typical money advice. I’ve tried to fit into a mold by using typical money advice and I had less control of my money and went further into unnecessary debt. Now, I live to teach others how to break the mold in their own lives and find their version of financial freedom. Read more about me.

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