By: Jessica Glezellis
As a credit union manager of a financial wellness program, I believe it is important to provide financial resources and tools to help members make educated financial decisions. Now more than ever, financial wellness is top of mind as people are looking for answers on best practices to manage their funds during these uncertain times.
It has been over a month since everyone’s routine took a 180-degree turn. Recently, many Americans have received a stimulus check. Many folks have been significantly affected by this economic downturn and are heavily relying on this stimulus check to help pay their essentials or other financial needs. For others, the stimulus check may be another source of income. Regardless of what financial situation you are currently in, here are four ways to use your stimulus check.
1. PRIORITIZE YOUR FINANCIAL ESSENTIALS FROM HIGHEST TO LOWEST NEEDS
If the stimulus check is the only source of income for you and your family for the coming weeks, rank what essentials are most significant to you. Whether the funds are used for groceries or to cover your monthly rent/mortgage payment, prioritize your expenses from highest to lowest need that will help your family get through the next few weeks. Further, many lenders and organizations are allowing you to ‘skip a payment,’ or they are extending their due dates, so consider this when deciding how to allocate your funds.
2. BUILD AN EMERGENCY SAVINGS FUND
If you have not started building an emergency savings fund, the stimulus check may provide a great starting point. At a minimum, it is recommended to have an emergency savings fund that will cover three months of expenses. Similar to what is happening now, you never know when things will take a turn for the worse, and it is important to be prepared for those rainy days.
3. PAY OFF YOUR DEBT
Whether you have credit cards or short-term loans, the stimulus check may be used to pay down some of your debt. There are two ways you can pay off your debt: pay loans with the highest interest first or the snowball method. Paying down debt with the highest interest may save you hundreds over the life of the loan. As for the snowball method, the strategy works by paying off the smallest balance first. This method enables momentum to pay off the next lowest balance and continuing until the largest balance is paid off. Figure out which method would work best for you in being successful in paying down your debt.
If you feel comfortable where you are financially, consider investing your stimulus check. Putting the stimulus check into a money market account keeps the funds liquid (if you were to need it) and will let you gain some interest. Once things have stabilized, you may want to reevaluate whether you need to have the funds liquid, and if not, you may want to consider a certificate of deposit to earn a higher interest rate. Another way to invest is through the stock market. I am not a financial advisor, but you may want to reach out to one as many stocks have dropped significantly. You may be able to buy one for a bargain price, which may be beneficial once the economy stabilizes.
Remember, these are just a few ways to be able to use your stimulus check. If you have any questions regarding any of the above tips or regarding your financial situation, please contact me by email email@example.com, by phone 781-433-2977, or schedule a call with me here.
Be safe and be well.