President Biden’s first major piece of legislation, the American Rescue Plan, passed through Congress ushering in the third round of economic relief and stimulus checks. Aimed at stimulating the economy and helping those facing financial hardship, this round included $1,400 checks to millions of Americans and additional payments for people with children.
For some, the direct payments were a much-needed financial lifeline in difficult times. But those with uninterrupted income throughout the pandemic who are able to cover monthly bills and living expenses may be wondering how to best utilize the money. If you are trying to decide how to spend your money, here are 7 financially mindful ways to make your stimulus check work for you!
Pay off high-interest debt.
If you have debt, now could be a great time to pay off a portion of that. If you have any credit card or high-interest debt accruing, starting to chip away at it even by making a few extra payments can significantly reduce the amount of interest you have to pay and save you money in the long run.
Start an emergency fund.
If this year has taught us anything, it’s that you never know what tomorrow brings. It is better to be safe than sorry and have extra money on hand in case of emergencies like job loss, a critical home or car repair, or anything that requires money upfront. If you already have one, add to it!
You can’t go wrong with saving your stimulus check. Maybe the stimulus was that extra bit of cash that you needed to feel comfortable opening a savings account. If you have one, boosting your savings will pay off in the long run and create more financial freedom for your future self. Whether you are saving for a particular goal like a down payment for a house, a car, or just want to save in general, consider looking into a high-yield savings account to maximize gains while retaining easy access to your funds.
Do a home improvement project.
If you are like millions of Americans who are less satisfied with their homes since the beginning of the pandemic, consider putting your stimulus check toward a home improvement project. Home projects make you feel better about the space you’re living in, and if done right, increase the value of your home which can boost your equity, and therefore, your overall wealth.
Not sure where to start? Check out our blog on DIY equity-building home improvement projects here.
Open a retirement account.
Opening a retirement account is like investing in your future self! Especially if you don’t need access to the money now and don’t intend to in the near future, investing your stimulus check in a retirement account like an IRA or Roth gives you significant potential to grow your money. There is no federal minimum amount needed to open an IRA, and $1,000 is a great start.
The most obvious yet risky way to make your money work for you is to invest it in the stock market. There are many types of investment strategies, and the ease of the internet has made investing much easier for most people. Apps like Stache and Robinhood have made retail investing, or small scale, individual investments, extremely popular during the pandemic. In fact, retail investors now comprise around 25 percent of the stock market share compared to 10 percent pre-pandemic. If you’re not interested in this type of investing, there are much less risky and less involved ways to invest. Financial advisors, fiduciaries, and Robo advisors can help you invest cash while guiding you along the way. Make sure to research before deciding which investment strategy makes sense for you!
Support local businesses.
If you are itching to spend, consider doing so at local establishments. While you may not be directly padding your bank account, by spending money at locally owned businesses and restaurants, you are investing in your community! Money spent locally helps keep your local economy thriving. Check out some of our favorite Grand Rapids area businesses here!
Make your stimulus check work for you!