Written by: Jenny Gattinger, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
After much wait, the American Rescue Plan Act of 2021 was recently signed into law by President Biden. With this latest stimulus package, Americans making less than $75,000 ($150,000 for married couples filing jointly) will receive a check of $1,400 per person plus up to an additional $1,400 per qualifying dependent.
So, what are some ways you can best put your stimulus check to use? You may be wondering…
Pay your outstanding bills. If you’ve been struggling to pay your bills during Covid times, paying those off with your stimulus check should be your main priority.
Start or fund your emergency account. Traditionally, it was recommended to have an emergency fund equaling between 3 and 6 months of expenses. However, considering the current state of the pandemic, some financial professionals are now recommending having up to 1 year of expenses socked away in an emergency fund. If you’re just starting out, make sure to check out high-yield savings accounts for the best interest rates.
Pay off debt. Have you been relying on your credit cards to get you through Covid times? If so, your stimulus check could be used to pay off your credit card debt. Not sure where to start? You can start by listing all of your debts from smallest to largest. After making minimum payments on each debt, put any extra money towards the smallest debt to knock it out. Once that one is gone, put the amount you were paying towards it towards the next smallest debt to knock that one out and so on. This “snowball method” allows you to build momentum to power through paying off all of your debts.
Sinking funds for big purchases. Are you planning to purchase a house within the next few years? Or maybe you realize that your car will need a replacement soon? Heck, maybe you’re dying to go on your first post-pandemic vacation! If you are current on your bills, have a fully-funded emergency fund, are debt-free and you anticipate a big, upcoming expense, you may want to deposit your stimulus check into your corresponding sinking fund to get you closer to your saving goals.
Invest. If you find that none of the above applies to you, your stimulus check is the icing on the cake. Take advantage of the extra money and pay yourself first! Whether it be finally getting around to opening an IRA or putting the extra money into the one you already have, here’s your opportunity. Not to mention, you still have until April 15, 2021 to invest for 2020. Investing your extra $1,400 can go a long way. Just how long? $1,400 invested for 30 years at a 7% conservative average rate of return would be $10,657. Not bad!
If you’ve already got your retirement accounts fully funded, another option could be to invest in an S&P Index Fund, in individual stocks or REITs. Generally speaking, the younger you are, the more room for risk you have. You can read up on some of Jim Cramer’s picks for more information.
Interested in learning more about how to organize your finances? Join our upcoming group coaching course where we will dive into financial goals, budgeting, saving strategies, passive income, side hustles and retirement saving strategies.
Here’s to taking action and powering up your finances once and for all. Your future self will thank you!
Jenny Gattinger, Executive Contributor Brainz Magazine
Jenny is a personal financial coach with a passion for helping millennials reach their financial goals. Having completed a degree in Economics, along with Dave Ramsey’s Financial Coach Master Training, she teaches them how to organize their money and put it to work so that one day, sooner rather than later, they won’t have to. A millennial herself, Jenny’s financial savviness has allowed her to follow her dreams of travel and visit 50+ countries as well as compete internationally in two different sports, all while maintaining a sense of financial wellbeing.
