Hey there! Are you about to receive your $1200 stimulus check, or did you get it already? Are you wondering what to do with it? In this post, I'm going to discuss my top 9 picks for how to use your stimulus check wisely.
1. Pay Off Debt
Paying down debt is an excellent way to use your $1200 stimulus check. I personally recommend paying down your highest interest debt, such as credit card debt or student loans.
By doing this, you'll be paying less in interest each month, which is more money that you can apply further to your debts until they're paid off completely.
If you're out of debt already, or it consists mostly of a mortgage, you might instead want to use your Coronavirus stimulus check elsewhere.
2. Add to an Emergency Fund
Financial hardships are bound to happen. If you've lost your job because of COVID-19, you may be having trouble paying your bills. Set some financial goals and work on your emergency fund.
I go over emergency funds in the post linked below, but the general idea is that if you don't have an emergency fund, the $1200 stimulus check is a great way to start one. Having at least $1000 in an emergency fund is vital, though having three to six months' worth of living expenses is ideal.
If you're going to store your stimulus money in an emergency fund, the best place to do it is in an online bank account, such as a high interest savings account at my bank of choice, CIT Bank. The best reason to use an online savings account is that they have higher interest rates not found in brick-and-mortar banks. Start saving sooner than later.
3. Invest For Retirement
Do you have a traditional or Roth IRA? If not, you could open one up and use your stimulus check to get started. I use and recommend Charles Schwab Bank as a great bank to have a Roth IRA with.
When investing for your retirement, you'll want a diversified portfolio, and the best way to do this is to invest in index funds. While many people pick individual stocks when investing in the stock market, investing in index funds allows you to invest fractions of shares across hundreds of companies. This will help you grow your retirement savings steadily over many years, and you'll retire financially healthier.
By setting up automatic investments in popular index funds, your money will grow steadily for years. Check out M1 Finance for their easy-to-use automated investing and start earning.
- Are You Investing For The Long Term? Here's Why You Should
- Index Funds: A Better Solution Than Mutual Funds
By owning investments in a tax-deferred retirement account, such as a Roth IRA, you can invest after-tax dollars today and not pay any tax when you withdraw the money in your retirement.
4. Start a Passive Income Stream
You could use your $1200 Coronavirus stimulus payment to start a passive income stream. You can fund a passive income stream such as buying into dividend stocks or opening a certificate of deposit (CD) account with an online bank. If you're looking to open a CD, head right over to CIT Bank and build a CD Ladder for safe and secure passive income.
The best reason to start a passive income stream is to begin to earn extra money in your sleep. Then you can use that money to earn even more passive income. That's the wonder of how passive income works.
Related Post: 9 Passive Income Ideas For 2020.
5. Engage in a Hobby
Alright, $1200 might be a lot to spend on a hobby, so take a portion of the money instead and jump into something fun. Do you like gaming? Crocheting? How about painting? Use some of your stimulus check to engage in your favorite hobby.
Considering many of us are stuck at home, engaging in a hobby is a perfect way to distract from what's going on in the world. For me, I've been playing some of my favorite games in my spare time. It's the best thing I can think of when I'm unable to do my usual activities.
My wife crochets, and she's completed a few projects so far since we've been home. Find something you like and take some of your money to keep yourself busy
Related Post: 13 Fun Activities To Do At Home
6. Open an Online Savings Account for a Vacation
Travel is pretty dead right now, but that's a short term issue that will remedy eventually. My favorite place to travel is Aruba, and while our trip this year is canceled due to the COVID-19 pandemic, we will likely reschedule for next year and put our vacation fund into a separate savings account.
Opening a high interest online savings account is the best way to store vacation money. I'm a huge fan of CIT Bank for their competitive interest rates and easy to use platform.
By saving now, you'll be able to take a dream vacation when the world returns to normal. We're all probably going to need a nice change, right? Every month, put more savings into your vacation fund.
7. Train in a New Skill
If you're home right now, it's the perfect time to learn a new skill (or hone an existing one). Check out LinkedIn Learning for access to over 15,000 courses for one low monthly subscription. You can also select from over 100,000 courses on Udemy, a fantastic learning website.
With so many Americans out of work, learning a new skill will better assist them when employers open their doors again. This might be the opportunity you were waiting for to start a new career or try something completely different.
8. Fix Up Your House
Are you a handyman, or do you have access to a handyman? $1200 could go towards a house project such as fixing up a room or repainting.
While I'm not a DIY person, I can definitely see the value of what the stimulus check can do for someone who needs to fix up their house. If you have young kids, you could use the money for something nifty like a fort or to fix up their play space.
9. Treat Yourself to Something Nice
Last but not least, treat yourself to something nice. The Coronavirus pandemic has taken a massive toll on the mental health of all of us. If none of the above ideas sound good to you, or you have money left over from the $1200 payment, consider just spending it on yourself.
Buy yourself something nice or consider supporting a local restaurant by getting take out for yourself and your significant other.
We're going to be in this for quite a bit longer, so perhaps the best way to spend your stimulus check if you're not hurting for cash is to spend it on you and your loved ones to cheer up the mood.
Related Post: How To Manage Your Finances During A Quarantine.
Wrapping It Up
It's been a crazy couple of months (as of April 2020), but we're hanging in there, and those stimulus checks are right around the corner. Whether the stimulus is like a paycheck to you or not, save more of it as best you can.
I want to hear from you. Tell me in the comments below what you plan on doing with your stimulus check, or what you did if you've received it already.