5 smart ways to best spend your stimulus check
Most Americans have received their direct payments from the federal government amid the pandemic. Now what?
Stimulus checks have been the topic of discussion with opinions coming in from the likes of Suze Orman and other financial experts around what exactly you should and shouldn’t use them for. As with all things context is key in making suggestions to those eligible for the stimulus payment.
Here are 5 ways to best spend your stimulus check.
Pay down debt
It’s unsexy, it’s boring, and it’s peak adulting but paying down high-interest consumer debt is not only financially responsible, but it’s a major step toward wealth building. With income uncertainty being a reality for many people, plugging up any drain on income with your stimulus check or compounding debt is definitely one of the best ways to spend your stimulus check.
Build your emergency fund
According to Bankrate, only 41% of Americans would be able to meet a $1,000 emergency with money in their savings account. It might be tempting to spend on some luxury item or vacation, but we aren’t out of the woods quite yet with this global pandemic impacting every aspect of how we live, make money, and find (or keep) jobs. Even without the pandemic, life happens. This is a perfect opportunity to pad or create an emergency fund and it should be taken advantage of.
Invest in assets
No, I’m not talking about investing in the meme stocks you heard about from a friend or in your church congregation. If your essential needs are covered, you aren’t drowning in high-interest consumer debt, and you have an emergency fund, then investing in assets like the stock market, cryptocurrency, precious metals, and real estate are wise decisions. It’s important to draw the distinction between investing and gambling as many simply don’t do their due diligence before jumping in. Before you make an investment be sure to educate yourself on the potential risks of that investment or hire an expert who can help you.
Invest in education
The saying “it takes money to make money” is often true as access to certifications and high-value skills often exists behind a paywall. That doesn’t mean that your education has to be expensive, however, as there are a lot of free and low-cost methods to explore and acquire skills and certifications that will reduce the amount of time it takes for you not only to recoup the money you’ve invested but also make money well into the future. There are a variety of books, courses, coaches, and programs that you can take advantage of sitting in your living room. One such course is the Improve Your Money Mindset masterclass that focuses on priming your mind to think like the wealthy by recognizing and attracting money-making opportunities to you instead of you chasing the bag.
Invest in your mental health
The reality is that this past year has been out of the ordinary and extremely tolling on everyone’s mental health. Mental health matters and getting educated about and addressing it is important. Yes, you should be responsible for your stimulus payment by addressing the previous four items, but you should also be of sound mind and body to navigate the storm. If going out to a nice dinner buying crab legs or splurging on a new toy helps keep your wits about yourself then by all means indulge. Just make sure that you take at least a small portion of your payment to pay yourself first and cover some of the more pressing financial items bulleted above.
Ultimately, what you do with your stimulus payment is up to you and your unique situation may differ from others. Understanding that personal finance is indeed personal and making informed decisions that will best benefit you is the purpose of having a good financial education.
Rahkim is a Certified Financial Education Instructor with a decade of banking industry experience. He is an author, TED speaker, and was listed as one of Business Insider’s 2020 Top Innovative Coaches. For more info or to get connected with Rahkim visit his website at RahkimSabree.com or his social media @RahkimSabree on Instagram and Twitter.
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