Americans affected by the COVID-19 pandemic and related stay-at-home orders should start receiving Federal stimulus checks any time now. Some will receive their money deposited directly into their bank accounts while others will get paper checks in the mail. The question is how that money will be utilized once it arrives.
The stimulus checks are intended to help workers make ends meet while the economy is shut down. For example, single filers making less than $75,000 will receive up to $1,200. Couples filing jointly will receive up to $2,400. That may or may not be a lot of money depending on how much you normally make.
The first thing to consider is putting the money in the bank. Before you make any plans for it, sock it away in your bank account so that you are not tempted to go right out and spend it. Then sit down and consider your financial situation. Your money will remain safely stored away until you have need of it.
If you do not have a bank account, then find some other way to safely store the money. Resist the temptation to go out and buy something expensive just because you have the extra money. Remember, stimulus checks are intended to be extra money to tide you over until the economy gets going again. It is not extra money to spend on extra things.
It is assumed that most of us will have certain budget obligations we may not be able to meet while the economy is shut down. Stimulus money can close the gap. Take a good look at your budget over the next couple of months. Estimate how much you might have coming in as opposed to what you know will be going out. If the outflow is greater than the income, use the stimulus money to meet your obligations.
You might be one of millions of Americans now collecting unemployment plus the additional $600 federal benefit. As such, you might not need stimulus money to cover your budget. Again, don’t go out and spend it right away. The extra $600 is only set to last a couple of months. After July, any unemployment you still receive will be capped at the standard maximum rate. You may need your stimulus money once the extra federal benefit has run out.
Finally, you may decide that you do not need stimulus money at all. You have a couple of options. First, you can simply save the money for a rainy day. If the COVID-19 pandemic has taught us anything, it is the fact that we never know when rainy days are going to occur. It may be that the stimulus money you save now could be a lifeline for you at some point in the future.
A second option is to give the money to someone else who needs it. There may be people in your neighborhood struggling without any source of income. You might know of a single mother struggling to provide for her kids or a senior whose social security income just isn’t enough.
A third option is to donate the money to a charity that you trust. Remember that charitable contributions can be deducted from your taxable income with next year’s tax return.
If you have not yet received your stimulus check, keep an eye out for it. Direct deposits and paper checks should begin arriving soon. The money will help us keep things going and stimulate the economy until COVID-19 passes.