How to Spend Your Stimulus Check: 4 Smart Options

Nicole Dow

Updated December 31, 2020

A second round of stimulus checks is on the way to millions of Americans.

This time around, the maximum you’ll receive is $600 per adult (or $1,200 for married couples) — half the amount of the stimulus money distributed in the spring. Families will also receive $600 for each child under age 17, which is $100 more per child than last time.

Individuals making up to $75,000 per year (or $150,000 per year for couples) will receive the full amount of stimulus money. Those earning more will see their checks phased out by 5 cents for every dollar over the thresholds. However, people who file their taxes as head of household and earn up to $112,500 will also receive the full $600.

Before you see that boost to your bank account though, get prepared by planning how you can put the money to best use.

Of course, everyone’s financial situation is different, but here are four key things to consider when deciding how to spend your stimulus check.

1. Cover Your Needs First

If you’re having trouble paying bills or putting food on the table, you should use your stimulus money to cover those basic needs.

Create a bare-bones budget and total up the cost of your absolute essential expenses. Use your stimulus check to supplement where you’re coming up short for the next couple of months.

However, don’t wait until you’re in dire financial straits to seek assistance with your basic needs. Contact the United Way’s 211 network, the Salvation Army or your local food bank if you can’t afford groceries or housing.

Your stimulus check could also be well spent on necessary expenses like car repairs or dental work that you’ve been putting off due to lack of funds.

2. Increase Your Savings

If you’ve got stable employment and are bringing in enough money to cover your essential needs, look to using your stimulus check to bolster your emergency fund.

While the typical advice is to have at least three months worth of living expenses in an emergency fund, you might want to bump that to at least six months given the ongoing economic uncertainty created by the pandemic.

Separate your emergency savings from your spending money so you won’t be tempted to dip into your savings. A high-yield savings account will earn interest while your money’s sitting in the bank.

3. Think About Your Future

If your needs are being covered and you have a robust emergency fund, consider spending the money you’ll get from the stimulus bill to set yourself up for a better financial future.

Taking a certification course could position you for a promotion or new job. Alternatively, you could use the money as seed capital to pursue an entrepreneurial path.

Making a dent in your debt or paying a large bill upfront rather than over time could help you save money in the long run.

You also might want to think about using your stimulus money to cover upfront expenses that’ll help you save money over time. That could mean buying gardening supplies so you can grow your own produce and cut costs on groceries. Or maybe you want to buy reusable products like cloth diapers or a bidet attachment so you can stop buying throw-away goods.

4. Help Others

If you’re in a financially stable situation with a healthy emergency fund, another good use of your stimulus money could be to help others.

Use the extra cash to help a family member or friend in need or donate to a reputable charity. Or you could spend your money at local businesses and restaurants — or purchase gift cards for future visits.

You don’t have to have a financial surplus, however, to find ways to help others. Donating blood, going grocery shopping for an elderly neighbor or troubleshooting teleworking tech for a friend are all ways you can be of service without spending money.

Nicole Dow is a senior writer at The Penny Hoarder.