As many of you may know, over 80% of Americans will receive a check from the new government stimulus package. It is important to use this money wisely, so we have compiled a checklist to help guide your use of the money. Here are some guidelines to help you figure out the best use of the check for you.
Do you have a fully-funded emergency fund?
Here at the gym we consider a fully-funded emergency fund to be 3-6 months of ALL expenses in an easily accessible savings account. If you do not have this form of cash ready for an emergency, it is a great idea to use the stimulus check to start building an emergency fund. Even if you have 6 months saved, it is never a bad idea to pad the fund even further!
Do you have debt that you are working on paying down?
If you already have an established emergency fund and feel comfortable putting the money in other places, paying off debt is a great way to put your stimulus check to work. We suggest you start with any high-interest debt (likely credit cards) since this is really what’s costing you the most in interest!
Are you saving for retirement?
If you have the emergency fund and debt covered, then the next place to look is retirement! If you are actively saving for retirement (especially if it’s soon!) this is a great place to use your stimulus check! You should be investing in a combination of stocks and bonds, depending on when you are planning on needing the money for retirement. Here is our recommendation:
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Less than 1 year: High Yield Savings Account
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1-5 years: 60% stocks, 40% bonds
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5-10 years: 75% stocks, 25% bonds
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10+ years: 90% stocks, 10% bonds
Are you feeling really content with your financial situation?
If you feel good about your financial situation, then spend the stimulus check for its original purpose– to boost the economy! This doesn’t necessarily mean placing a haul order on Amazon, but rather spending it locally and intentionally. Use the money to keep your local economy afloat. This could be ordering takeout from our favorite neighborhood restaurant, ordering from a local shop, or supporting a nearby bakery. However you choose to spend the money is up to you– but make sure you think about where you want the money to go!
