After passing the CARES Act to provide fast and direct economic assistance to Americans, numerous people have been left wondering whether or not the one-time payment in the form of their stimulus check is enough to keep families afloat amidst such economic uncertainty and a rapidly rising unemployment rate.
If you filed your taxes in 2018 or 2019 and earn under $75,000 for those tax filing years then you’ll be entitled to a one-time $1,200 check assuming you’re not married and haven’t claimed any dependents. And, while that’s a hefty sum of money that can certainly help most people pay for bills and expenses, it’s not enough to live off of for even a month in most cities around the country.
If you’re set to receive your Economic Impact Payment in the coming weeks, how do you prioritize spending the money and how can you budget it to make the money last longer? We’ve got a few tips to help you stretch your stimulus check if you’re working to make ends meet.
Prioritize Paying High-Priority Expenses
As part of the CARES Act and other measures that the government has taken to reduce the economic strain on Americans right now, mortgage loans and student loans are being deferred. Currently, federal student loan borrowers are automatically being placed in an administrative forbearance until September 30th, 2020 with a 0% interest rate. And, most homeowners are now able to defer their mortgage payments for 180 days with no penalties as well.
What does this mean for you and your stimulus check? It means that you can prioritize your expenses. If you usually pay $300 per month for your student loans, avoid using your stimulus check to help with that payment as your loan will be in forbearance and gaining no interest until the end of September. Instead, you can better allocate the stimulus check money elsewhere.
Focus on high-priority payments instead, which includes other bills that you can’t defer, healthcare expenses, essential items such as groceries and clothing, plus any high-interest credit card debt you have that your card issuer won’t let you defer or that will accrue too much interest if you put off paying it off.
Use Budgeting Tools To Help You Manage the Cash
If you’ve just been laid off or normally live paycheck to paycheck then this stimulus check money is going to go a long way for you. To ensure you can stretch it even further, go ahead and take advantage of free budgeting tools and apps that exist to help you financially plan for the future.
From Mint to YNAB and even Goodbudget, there are a lot of great apps that will help you achieve your financial goals while showing you how to most effectively budget the money you’ll receive from the government. For this kind of budgeting, we’d suggest looking into Goodbudget, as it follows the envelope system of budgeting.
With the app, you’ll be able to portion out your entire stimulus check toward specific spending categories. So, that means that you won’t ever be able to spend more than $200 of your Economic Impact Payment on groceries, for example. This helps avoid overspending and really allows you to track where your money is going.
Put the Money in a High-Yield Savings Account
If you are lucky enough to be still receiving a regular paycheck then chances are that your $1,200 (or more) stimulus check is a nice additional cushion to add to your emergency fund in that case that you or someone in your family experiences unemployment due to the COVID-19 pandemic.
If that’s the case, then you might feel tempted to make an impulse purchase with the influx of cash you’re about to receive. Resist that urge! Instead, put the money into a savings account, preferably a high-yield savings account where it will earn more interest over time. Now, it’s important to note that, because interest rates are low, your money won’t earn as much as it might normally in an account like this.
Even though rates are lower than usual, it’ll still earn you more money on your savings overall. And, when interest rates go back up, you’ll have saved more money to eventually enjoy higher APYs as well. This ensures that you’ll be able to put your money to work for you during the crisis and stretch your stimulus check well beyond a one-time payment.
Investing in Your Financial Future
The one-time stimulus check might not be enough to cover all of your expenses right now, but it can sure help make a dent where and when you need it most. Assessing your financial situation is the first step in figuring out how to allocate the stimulus money and then, later, how to stretch the check to last even longer.
To help further invest in your financial future, sign up for a debit card that will allow you to save while you spend. Yes, we know it sounds counter-intuitive, but it’s true! With the Cheese Debit Card, you have access to cashback deals. Add that onto our Double Cheese offer and you’ll be raking in even more cash to add to your stimulus check.
Interested in learning more? Sign up today.