If you're receiving a stimulus check from the IRS during the COVID-19 pandemic, Fifth Third Bank offers 4 ways to make the most of your stimulus money.
Millions are receiving a stimulus check (or direct deposit) from the government as part of the Coronavirus Aid, Relief, and Economic Security (CARES) package. The package—which is meant to be a way to help curb the financial impact of economic issues caused by COVID-19—doled out approximately $2 trillion to several groups impacted by the coronavirus pandemic.
How much each person received was dependent on their income. Those with adjusted gross incomes up to $75,000 a year were eligible for $1,200, with parents of kids under 17 receiving an additional $500 per child. If you recently received a stimulus check and haven’t put any thought into how you’ll spend your money yet, the following are some ways to get the most out of the money.
Cover Your Essentials
Most evidence indicates that Americans will largely be using the money to cover their basics, like food and gas. If you’ve lost income—whether in whole or part—due to the current economic climate, this is an especially important way to spend the money. Covering your fundamental necessities—including things like rent or mortgage and utilities, as well—should be your No. 1 priority. Check-in with your monthly budget to see where you might struggle to cover certain bills due to recent changes, and then earmark a certain amount from your stimulus check for each of those items.
Bulk Up Your Emergency Savings Account
Stocking an emergency savings account with at least three to six months’ worth of essential expenses is important on any given day, but it’s especially essential right now. Even if your income hasn’t been impacted by the Coronavirus pandemic yet, that doesn’t mean it won’t be in the future. If you aren’t comfortable with how much money you currently have in an easily accessible account, consider using your stimulus check to open a savings account set aside specifically for emergencies. You can use Fifth Third’s emergency fund calculator to help you figure out how much money should be in your emergency fund.
Figuring out how to start a savings account while still covering monthly bills is usually one of the main barriers people come up against in terms of opening a savings account. If you don’t need to use your stimulus check for current expenses, this could be a good way to put it towards your future financial goals. This money can come in handy down the road if your income is eventually impacted by the pandemic, or if an unexpected but important expense crops up, like a large medical bill, or something that needs to be fixed in your home or car. Being able to pay for these big-ticket expenses can mean the difference between going into debt and staying on track, financially. Then, once things return to normal, consider following the advice of the Consumer Financial Protection Bureau’s Start Small, Save Up program, which advises putting away even a small amount—like $5 or $10 a week—to start building your emergency savings even more. Setting up an automatic payment directly from your checking account to your savings account at reoccurring intervals is a great way to help make savings a habit.
If you’re looking for easy ways to save money, a Fifth Third Momentum® Savings account can help you get started.
Put It Toward Retirement
Although the market is volatile right now, it’s important that people continue to put money away into their retirement accounts as they normally would. Continuing to contribute to your portfolio ensures that you’ll make the most of market gains when the economy picks up (which it will), and buying when prices are low means you’ll be able to get the most bang for your buck.
If you’re not sure how your portfolio is fairing throughout all of this, or how to go about putting in additional contributions, consult with a financial expert who can help guide you through the process or read our article on how Covid is impacting retirement accounts.
Donate to Those In Need
If you’re lucky enough to be completely unaffected financially by the COVID-19 pandemic, and if you’re not worried about your emergency savings account or the amount you’re contributing to your retirement funds, consider donating some or all of your stimulus check to organizations in need—and there are plenty. You can check in with your local hospital to see if a donation might help them collect necessary Personal Protective Equipment for healthcare workers, or consider donating some money to essential services that are helping provide food to those in need during this unprecedented time, like No Kid Hungry or Feeding America. On a local level, consider supporting your favorite small businesses by buying gift cards online for local restaurants that you can visit later.
Although these are uncertain and stressful times, it’s important to remember that things will return to normal. The CARES stimulus checks can hopefully help you get through some of the initial financial hurdles, especially if you’re thoughtful with where the money goes. For any financial concerns specific to your needs, consult with a financial expert.
If you believe you should have received a stimulus check and you haven’t yet, check IRS.gov for the status of your payment.