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4 Smart Ways to Spend Your Stimulus Check

By Dave Kovaleski - Mar 30, 2020 at 6:53PM

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You can use the money to help your family and your community.

A $2.2 trillion coronavirus stimulus/relief package was signed into law by President Trump last Friday, which, among other benefits, puts money in the pockets of most Americans

If your adjusted gross income is less than $75,000 for single filers and $150,000 for joint filers, each person will receive a one-time check of $1,200 each. So for a married couple making under $150,000, you'll get $2,400. Both individuals and joint filers within that range will also receive an additional $500 per child for kids 16 and under. So, a family of five with three kids would get $3,900.

For those who earn more than the $75,000 or $150,000 limits, the rebates will be reduced by $5 for each $100 up to $99,000 for single filers and $198,000 for couples. Those who earn more than that will not get a check.

Overall, about 83% of taxpayers -- or roughly 125 million people -- will receive checks from the government to offset hardships related to the coronavirus pandemic. Many, particularly those who have lost their jobs or suffered a decline in income, will use that money to pay bills or feed their families. But for those who are still working, here are some smart ways to spend your stimulus check.

A person using a calculator at a desk

Image source: Getty Images.

1. Pay down credit card debt

The Federal Reserve cutting interest rates to the 0% to 0.25% range will have an impact on most credit card interest rates. The rate reduction won't be huge, but it will help. The average American carries over $8,000 of credit card debt, so this might be an opportunity for some to reduce that amount.

2. Set up an emergency fund

According to Bankrate, less than 30% of Americans have an emergency fund -- or, essentially, a savings account for unforeseen expenses such as a major home repair, exorbitant healthcare expenses, or an unexpected job loss. The coronavirus crisis has created hardships for businesses and individuals that have thrown many for a loop. Bankrate found that only 18% of Americans have enough money in savings to live on for six months. 

If you haven't lost your job or income related to the coronavirus crisis, you should still be fully prepared for anything lest your circumstances change. Putting a significant chunk of that stimulus check into an emergency fund could prove to have been very wise down the road.

3. Invest it

Depending on your individual circumstances, this might be a good time to invest that money in a retirement portfolio or for college expenses. If you have a solid emergency fund, have relatively low credit card debt, and remain gainfully employed, why not take some of that money and invest it in your portfolio?

The markets have been hit hard by the coronavirus crisis, but there are many good buying opportunities right now. Many great, established companies have seen their stock prices drop to lows they haven't hit in years, so now may be the best time to invest in them before they move back up.

Remember, despite the short-term volatility, investing is about the long term. Even with this recent sell-off, the S&P 500 is up about 24% on an annualized basis over the past five years. Consult your financial advisor about the best ways to invest if you do choose to invest any of your relief money.

4. Help the community

Again, depending on your personal financial situation, you may want to consider using some of your relief checks to help those in need in your community -- or elsewhere.

Local families are struggling to make ends meet, small businesses are trying to stay afloat, healthcare and emergency workers are working overtime, and in dangerous conditions, to help people without the necessary supplies.

There are many trusted sources accepting donations, including the World Health Organization, the American Red Cross, and various nonprofits. Check with your local and state governments for more opportunities to help those in need. Remember, we're all in this together.

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