Smart Ways for Families to Spend their Stimulus Check
President Biden has officially signed the third stimulus bill, which will give many American’s another round of stimulus checks. Soon, if you qualify, you will be receiving $1,400. If you do not need the money right now, then you may be wondering what you should do with it. I have put together a list of smart moves for how to spend your stimulus check.
Save For Retirement
If this money is not something that you need right now or in the near future, it may make some sense to put this money into a tax-advantaged retirement account such as an IRA or a Roth IRA. You do need to have earned income for this year in order to contribute to these accounts. However, you can still make contributions for 2020 up until April 15th. If you do not have either of these accounts set up, there are numerous places you can open an account to start saving and investing for your retirement. I have a Roth set up at Acorns and have been extremely happy because it is easy to set up, and they take care of the investing. Start investing with Acorns today! Get $5 when you use my invite link: XPK7HX https://acorns.com/invite/XPK7HX
Start or Build-up an Emergency Fund
If you do not have a cash emergency fund of at least 3-6 months of living expenses, you should highly consider stocking away your stimulus check into a savings account. As we have all seen from Covid-19, our lives can be flipped upside down extremely quick. Having some money saved for a rainy day is one of the first steps in feeling financially stable.
Make sure you put the money in a savings account where you are not going to be tempted to spend it. Putting it in an online savings account where you can earn a little more interest than a regular savings account may be a good idea as well. Here are some online savings accounts you can look into and compare interest rates.
Save for College
If you are a parent, you may want to consider saving for your children’s college. If you have not started saving for your kid’s college, now might be a great time. Consider opening up a 529 in your state. 529’s are tax-advantaged when you take the money out and they grow tax-deferred. These funds can be used tax-free if they are used for qualified college expenses.
Pay off High-Interest Debt
Currently, interest rates are fairly low on mortgages, car loans and student loans. However, if you have high-interest credit card debt or other high-interest loans, now may be a good time to pay it off or down. Getting rid of or lowering monthly payments will free up some of your cash by reducing your monthly expenses.
Take Care of Maintenance You’ve Been Putting Off
Do you have items around the house or car maintenance you’ve been putting off? Maybe you are in need of some new brakes, or you have some windows with popped seals. Now may be a great time to care of some of those items that have been on your list. I personally plan to get some things on my car fixed before our baby arrives.
Put Your Money to Work
Another great option for these funds is to invest them in a regular investment account. You may be thinking that you do not have enough to invest, but you can start investing with as little as $5 with apps like Acorns and Stash. Once you start an account with Acorns, they put you in a model portfolio made up of different exchange-traded funds, and it will automatically rebalance the account every time money is added. They take all of the hard work out of investing. You can even set up something called round-ups. This allows you to link your checking account to your Acorns account, and it will round up the change on purchases that you have made. The change will be transferred to your account and invested. Getting started with Acorns takes just a few minutes. You can use this link to get $5 when you start investing.
How Do You Plan to Spend Your Stimulus Check?
I hope this list gave you some ideas on how to spend/save your stimulus check money. What are your plans for this money? If you liked this post, don’t forget to follow me on Facebook, Pinterest, and Instagram. Click here to check out some of my other blog posts.
Disclosure: Because the information on this blog is based on my personal opinion and experience, it should not be considered professional financial investment advice. To read my full disclaimer you can click here. I may receive compensation for some of the links or services recommended on my site, to reach my affiliate disclosure, click here.
