This article originally appeared on A Dime Saved and has been republished with permission.
Did you get some stimulus money? How are you planning on using it? Here are some SMART ways to use your stimulus money.
Stimulus money just hit your bank account, and wow! Whatever your fears regarding inflation or government overspending, etc., it sure is nice to get some extra cash deposited into your account. This will help so many people pay their bills and give a bit of breathing room to so many, like those with bills to pays.
We have been luckier than many people during this pandemic, but we still are struggling. This check’s timing came at a perfect time! We used our stimulus money to give some to charity, add to our Life Happens fund, and the rest is for other upcoming expenses. What are you doing with yours? For those of you who don’t need your stimulus money to pay for basic bills and a roof over your heads, here are some smart money moves you can make with your stimulus money!
1. Give to Charity
A good rule of thumb is to give 10% of your income to charity, and that includes this money. When you’re lucky enough to get “extra money,” it can help to try to remember those who are even in more need than us. So, you could use your money to help people. That means that you have a moral obligation to help people who are less fortunate than you. This involves giving charity to those who need it. If you can, give as much of your stimulus as possible to the people who need it the most.
2. Pay off Debt
If you have a lot of debt then paying off a chunk of it can help you climb out of debt sooner and perhaps lower your monthly payments as well. Tackle the debt that is the most predatory (or weighing on your mind the most). Then, you can decide whether to pay off the highest interest rate first or pay off some smaller debts in the avalanche method.
3. Start Saving $1,000
Saving $1,000 is a gamechanger. Many Americans do not have that kind of money put away. Do this, and you will be ahead of the game. Your financial future will change. (Need inspiration? Join the $1,000 Savings Challenge)
4. Stock up Your Emergency Fund)
A fully-stocked emergency fund can help a lot, even if it doesn’t stay fully-stocked for long. Three to six months of expenses for your emergency fund is the suggested rule of thumb, but obviously, this should be tailored to your particular circumstances and risk tolerance. Having an emergency fund is one of the smartest things you can do for your continued financial stability.
5. Save for Retirement
You can’t use your stimulus money as earned income, so you cannot put it into accounts where earned income is required (i.e., Roth, etc.), but you can use other money to fund those accounts and “pay yourself back” with the stimulus money. Choose the best retirement account for you and get started! Don’t forget: the earlier you start saving for retirement, the better off you will be!
6. Invest Your Money
Take some of the stimulus money and invest it. Index funds are a crowd favorite and are generally not incredibly risky. If you’re brand-new to investing and unsure how and where to start, check out this straightforward guide on How To Invest Money Like A Boss (8 Steps To Start Investing).
7. Invest in Yourself
Take a course. Hire a mentor. Buy a book. Go back to school. Take some money and invest in the most important person: yourself. The dividends will be worth it!
8. Save for Your Kids
Whether you decide to start or contribute to a 529 or save for your kid’s future in another way- put some money away for your kids. They will thank you for that foresight one day! (Well, hopefully!) Setting up your kids for a financially stable future is one of the best gifts you can give your family.
9. Buy Something That’ll Save you Money
There are times when buying something more expensive can save you money in the long-haul. This is a problem for many; they often can’t afford an initial purchase to save them money. Some examples include a good computer, a second freezer for storage, an instant pot, etc. Take this “extra money” and buy one of these items to help you save more money later.
10. Future Budget Planning
Do you have any big expenses coming up? A baby on the way? A car about to break down? A lease that is ending? Start Future Budget Planning and put some money away to prepare for these exciting yet expensive life events. Being prepared for life’s financial adventures means that they won’t catch you off guard.
11. Improve Your life
Is there something that you want or need that can improve your life? Money is a tool that can and should be used to improve your life and make your life easier and better. After all, what is the point of money if we cannot spend it? Do your best to support small businesses that can use the infusion of cash and shop responsibly. You’ll be helping the economy grow and helping a store owner as well. Win-win!
Stimulus checks have helped a lot of people. If you qualify and are not struggling day-to-day, you can still use your check to make good financial choices for you and your family. What are you planning on doing with your check?
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