Once you get your stimulus check from the government, you are free and clear to spend that money however you wish. If you don't need to immediately use that money on basic survival, like rent, food or utility bills to keep the lights on, here are five ideas on how to use your stimulus check that make good sense.
pay off high interest debt first
You can use your stimulus check to pay off outstanding debts, or at least make a dent in them. Identify all the debts you have, the interest rates each debt accrues and put the stimulus money toward the debt with the highest interest rates first. This will accomplish two things:
1) Get you out of debt faster
2) Save you money in the long run
If you're unclear where to even start with your debt or want to read more on the virtues of being debt-free -- HOW TO ELIMINATE DEBT & WHY BEING DEBT-FREE IS SMART
Save it for emergencies
If you don't already have an emergency savings fund then getting stimulus money is the perfect opportunity to create one. The purpose of such a fund is for unexpected life events like -- losing your job, medical bills, home repairs, vehicle maintenance or any number of random expenses you don't plan for monthly between you and your family.
Emergency Fund Suggestions
Emergency, or rainy day funds vary based on the size of your household but generally speaking should be at least $500, and more comfortably at least $2000. Many like to aim for at least one month's income. And if you really want to be prepared for losing your job financially, having the equivalent of three months income set aside would be best, as that's typically how long it takes on average to find a new job. A stimulus check alone wouldn't get you three month's earnings set aside, but it would be a solid amount of savings to have in case of emergencies and unexpected life events, which always tend to happen at the worst times.
Stimulus money can best be invested over simply spent, if you don't have outstanding debts and your emergency savings is already in good health. While it can be tempting to see stimulus money as free money you can quickly spend as fast as you obtain, it's worth considering making that money work for you in the long run.
If you invest that money into stocks, bonds, an IRA or any number of other investment opportunities, not only will you maintain that money into the future, but it has the opportunity to accrue interest and turn into much more than you started with. Investments yield returns; money that makes you more money if you invest wisely and be patient with it.
buy things you can get your money's worth with
If you've paid off all debts, have great savings already and feel solid in your investments and retirement accounts, you might already be scrolling through Amazon in anticipation of the next new toy to buy. It's worth putting some thought into what you actually buy with your stimulus money in this case. Aim for items you can get your money's worth from in the long term.
Instead of spending a lot of money ordering out for food, you could invest that stimulus money in more/better kitchen cookware, dishware and cutlery. That way you can save money in the long run cooking more at home, while enjoying the cooking process more and having more ability to cook and serve food from home.
Or consider buying a better TV. For an item most Americans use for dozens of hours every week, a newer/better television can make you more likely to enjoy chilling at home on the couch instead of wishing you were out, where you would likely be spending much more in the long run on overpriced drinks, overpriced popcorn, gas and parking.
don't spend all of it
Just because you got the stimulus check in one big chunk doesn't mean you need to spend it all right away in the same big chunk. Remember that your money can go further on certain items at certain times of the year. Black Friday and Cyber Monday can be the best times of the year to buy household items and electronics, and it would be smart to also shop around for deals on new clothes, furniture or other consumer goods over time.
If you don't opt to put the stimulus money into emergency savings, you can spend a little of it now and set aside the rest for a rainy day fund. Or even a future road trip or mini vacation, once things like the pandemic are over.