President Biden signed into law the American Rescue Plan Act of 2021. This $1.9 trillion coronavirus relief package includes a $1,400 stimulus payment for singles and $2,800 for a married couple filing jointly, for eligible recipients. Although eligibility requirements are determined by household income and dependents, this third round of economic relief is meant to assist those hardest-hit by the pandemic.
To find out if you’re eligible to receive the stimulus money or to check your stimulus check status, use the “Check my payment” tool, provided by the IRS.
If your employment has remained intact throughout the pandemic and you haven’t experienced any financial hardship, you’ll want to determine how to best utilize the stimulus payment to better your short or long-term financial situation.
The following are six financial considerations regarding what to do with the next stimulus check.
1. Reduce debt or avoid additional debt. Throughout the pandemic, you may have incurred additional higher-interest debt. “Using the stimulus payment to help reduce your debt obligation not only makes good financial sense but will also prepare you for a secure financial future,” said Jennifer Miller, Product Manager Officer. “This is the perfect time to reduce high interest balances, such as credit cards, and by doing so you are saving on interest, therefore, saving money.”
2. Enhance your savings. If you’ve ever wanted to increase your short-term savings goals, and already have a fully-funded savings account, you may want to consider opening a high-yield CD. “A CD offers clients the ability to maximize their savings, with at least $1,000, and growing it at a fixed rate for a full term,” she added. You may open an account online or click to find out more about the benefits of a CD.
3. Boost your retirement. Retirement savings may have been put on the back burner throughout the pandemic or you may just need to do some catching up. “Pay yourself first! The delayed gratification that investors derive from saving and affording a comfortable retirement in the future exponentially outweighs the instant gratification of spending excess or discretionary income today. Use all or some of the stimulus money to contribute to your or your spouse’s retirement accounts” said George Nicola, CFP®, CIMA®, CAIA, Vice President and Senior Portfolio Manager with First Bank Wealth Management. “Contributions to tax-deferred or even tax-free retirement accounts offers significant tax advantages, and positions you for a comfortable retirement. If you, or even an unemployed spouse, doesn’t currently have an individual retirement account outside of your employer-sponsored plans, reach out to an advisor at First Bank Wealth Management to see how one may benefit you.”
4. Start or finish a home improvement project. If you’ve been putting off long overdue home improvement projects or you’ve really needed to make necessary upgrades or repairs, using the stimulus check to help fund those projects are going to help you maintain your home and your home’s value. “If you delayed your home improvement projects throughout 2020, you may want to consider using these additional funds to help you put money back into your home,” Miller said. “If additional funds are needed to complete the project, consider opening a home equity line of credit to help you even further.”
5. Help a charitable organization. Throughout the pandemic, charities have felt the strain from decreased opportunities for fundraising events and activities, reduced donor support, and an increase in demand for their services. “Supporting a charitable organization can help further their services in your community, which ultimately benefits us all,” she said.
6. Support a locally-owned business. The pandemic has been particularly hard for small business owners. Shut-downs, decreased capacity, and restrictions have impacted profits and even caused many to close their doors for good. Consider ways you may use the third round of stimulus payments to help support a locally-owned business, restaurant, or retail establishment.
As the pandemic continues to wreak havoc on the wallets of many Americans, the stimulus check will be a welcome relief. “It’s safe to say everyone has been impacted by some aspect of the pandemic,” Miller continued. “The economic relief of a third round of stimulus payments may be the final boost many Americans need to help them financially and finally reach the end of this.”
To learn more, read “The American Rescue Plan Act of 2021: What does the New $1.9 Trillion Federal Relief Law Contain?”
Contact a trusted First Bank advisor to discuss how the stimulus check can help boost your savings, retirement, and long-term financial goals.