How To Best Spend That Stimulus Check On ‘How To Money’

Stimulus checks and tax refunds are starting to hit people’s bank accounts this week, so How to Money hosts Joel and Matt spend this episode talking about the best ways to use this money. Of course, the coronavirus has created a myriad of financial situations, with so many people out of work, and many others feeling “a Zoom call way from being let go;” they take that into account, presenting a number of scenarios to use this once-a-year windfall well. First and most importantly, they stress the need to beef up your emergency savings, so you’ll have the next few months’ worth of expenses put away. “A lot of people think cash is trash,” Matt says, preferring to put extra money into investment products or real estate, but in times like these, it’s important to be ready for anything – especially for medical expenses, they point out. So prioritize your emergency savings first.

If your emergency fund already looks pretty healthy, the next place to put this money would be into your retirement account, especially if it’s matched by your company. It’s true many companies have had to temporarily suspend that benefit during the economic downturn, but it’ll definitely be reinstated in the future, and if you’re in the wealth-building period of your life, “now is a great time to be investing,” Joel says. The market is on sale, and there are tax benefits to incentivize investment right now as well, so think about putting this check into your 401K – or any other retirement accounts you may have, like HSAs or Roth IRAs. Another good thing to do is to pay off high-interest debts, but again they stress that “right now, it’s a time of intense instability,” so your emergency fund is the number one priority; don’t pay off any debts or invest any money at the expense of that savings account. 

The other thing you may want to do is give that money away. After all, this podcast is dedicated to healthy personal finance, but that’s not about "amassing a giant pile and swimming in it” like Scrooge McDuck. Money should be used, Matt and Joel believe, and used well. So if you’re in a position to give away your stimulus payment or a portion of your tax refund, it’s a great use of that money, injecting a much-needed cash windfall to local businesses or nonprofits who are in a tailspin right now. Get all this great information with a lot more detail and spend that check like a boss on this episode of How To Money.

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