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6 ways to use your stimulus money, however much it is



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How will you spend your stimulus check?

Sarah Tew / CNET

A third stimulus check for $ 1,400 could be available soon as the details for one $ 1.9 billion aid package are elaborated in the Lower House. Meanwhile, the final payment of $ 600 should have made its way into qualified Americans, but the IRS confirmed millions of people miss checksThose who missed can still get all or part of their first or second check by one Clawback discount on their tax returns

With the second stimulus controls, the IRS had until January 15 to send the payments direct deposit, called paper checks or debit cards Economic impact Payment cardsThe second wave of stimulus payments was made nine months after the expiration of the CARES Act last March, including a maximum check of $ 1,200. You are entitled to it claim money you didn’t get it like part of the 2020 tax seasoneven if you have a nonfiler, someone who doesn’t normally file taxes

Whether you’ve received your stimulus check or are waiting to get the money through a tax refund, here are six ways to make the most of your payment.

Take care of your most pressing needs first

Above all, make sure your immediate needs are met. This includes food, monthly bills and rent or mortgage. But before you prioritize rent over food, for example, consider that many jurisdictions, utilities, and even banks are providing relief from the pandemic. Check out which programs you can take advantage of and allocate the money accordingly. President Biden, for example, extended the moratorium on deportation until March 31.

Set it aside to pay your taxes

Tax season starts Friday and it is clear that the IRS won’t delay tax returns like it did last yearThis means that tax is due in two months. Stimulus controls are not taxed according to the IRS, but unemployment benefits will be taxed. If you don’t need to use the $ 600 right away, keeping it close by to pay your taxes is ideal.


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Reduce your credit card debt and loans

One way to secure your financial future is to reduce your debt. A significant payment made to pay off a credit card and loan helps reduce the amount of interest paid on an account with a balance. The less interest you pay, the more money you will have available in the future. But before you do that, check with the debt holders as some offer relief, including deferred payments and forgiven interest. Just be sure to read the fine print, as some of the help provided can slow interest rather than forgive.

Create or add to an emergency fund

It cannot be overstated the importance of having an emergency fund. As this pandemic shows, the world can change very quickly. The fund should be equal to the amount spent on expenses during three to six months. While the The $ 600 stimulus check will not cover that entire amount, it can be used as a starting point. If you’ve exhausted or spent some of your emergency funds, this second stimulus check can help get you back on track. A simple savings account can be used to keep the money safe.

Donate to people who need it more

Those lucky enough to not need any of the $ 600 for themselves should consider giving it to those who do. There are still many charities fighting the pandemic, such as food banks and hospitalsAnother consideration is to help friends and family members who have been hit hard by the pandemic.

Open a long-term investment account for your children

Part of the aid package provides an additional $ 600 per child. If your family is already comfortable, there is a way to use that money to help your kids’ future.

“If you don’t need this money, consider opening a 529 plan for your child,” said Marguerita Cheng, a certified financial planner. “Your state can provide a tax break. This money can become tax-free. You can even contribute a modest amount of say $ 50 to $ 100 on a regular basis, if necessary.”

To start a 529 plan, contact your bank or investment firm to see what they have available and what benefits you get when you open one.


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