Due to the effects of the COVID-19 pandemic, the federal government will be extending assistance to many Americans in the form of an economic impact payment—or as it’s more often called—a stimulus check. The initial direct deposits have already begun to hit the accounts of those eligible to receive them.
The purpose of the stimulus payment is two-fold: first, to help struggling Americans who are experiencing a loss of income due to the COVID-19 pandemic and, second, to help stimulate economic growth as Americans use this money to pay their bills and purchase food, medicine, and necessities for their families.
Making the most out of your stimulus payment can have a huge impact on yourself and your family’s well-being. Our Nationally Certified Credit Counselors have complied a list of tips to consider as we all assess our current situations.
Here’s how you can make the most of your stimulus check:
Open a Checking or Savings Account
If you don’t currently have a checking and savings account, now is the time to open one. Checking account holders can save up to $4,000 a year on check cashing fees just by having a regular checking account rather than cashing your checks at a grocery store or pay day loan provider.
If you’ve experienced roadblocks in the past when it came to opening a checking account, many credit unions like Pelican offer a second-chance checking account with a low monthly fee to help you get back on track.
Assess Spending Needs
If you’ve experienced a loss or stoppage of income, focus on spending your stimulus payment on shelter, food, medicine, utilities, and other necessities first.
Though many cities have banned foreclosures and evictions for non-payment of rent, you should try to pay all or part of it if you can. Make sure that you work with your landlord or mortgage holder to make arrangements. Once the ban is lifted, you don’t want to owe several months of back payments and face a potential loss of housing.
After housing payments are taken care of, focus on things to keep you and your family healthy and safe like food and medicine. If you’re having a hard time paying your utility bills, contact those companies immediately. Though there is a service cut-off ban in many cities at this time, the payments are still due. All utility payments will still be due once the ban on service cut-off is lifted. You want to make payment arrangements now to prevent losing services once the Stay at Home order ends.
Once you’ve covered all of your basic needs, focus on paying your regular debt payments such as vehicles loans, credit cards, and personal loans. If you cannot make those payments at this time, contact your creditors. Many creditors are offering relief programs to help stretch out your payments so that you can use that monthly income to cover your necessities.
Want to learn more about Pelican’s Member Relief Program and other disaster resources available?Visit pelicanstatecu.com/resources.
If you have student loans, contact your loan provider to determine if your loans qualify for the automatic deferment and 0% interest mandated for student loan borrowers during the pandemic. Remember, if you can afford to keep making payments, now is the time to chip away at that loan as every payment will go directly to principle!
Save, Save, Save
If you are fortunate enough to remain working at your same pay and not experiencing additional expenses, you can save your stimulus payment! Everyone should have an emergency fund of ideally $1,000 to handle any small emergencies that life may bring—like air conditioning repairs or tire replacement. You can never go wrong saving a windfall for a rainy day!
If you already have an emergency fund, you can save for future purchases that you may want once this pandemic ends. Opening a youth savings account to start teaching your children or grandchildren to save is a great use for these funds too. Plus, some youth savings like Pelican’s Team Pelican account offer perks for young savers such as money for good report card grades.
When’s the right time to start teaching children the importance of saving?Check out this blog post to find out!
Think Long Term
Once you’ve paid for all of your necessities, paid down debt, saved for emergencies, and prepared for future purchases, consider investing your stimulus money.
You can invest in the success of non-profits by donating some or all of your stimulus check to those doing necessary work in our communities during the pandemic. Or you can invest in your education by taking additional personal or professional development classes while working from home.
Consider improving your new workspace or your home by investing in repairs or renovations you’ve been dreaming of and haven’t had time or extra funds to tackle. You can also invest in your health by purchasing healthy foods, exercise equipment, or self-help materials to improve your well-being while staying at home.
Remember the Game Plan
All in all, the most important thing you can have when receiving extra money is a game plan. Follow these steps from assessing your needs to investing in your dreams, and you’ll truly make the most out of your stimulus money.
Need help deciding where to start? Schedule a phone session with one of our Nationally Certified Credit Counselors today!
Once a Pelican State CU member, always a member—through life’s milestones, we’ll always be there to help you with your financial needs. Your Financial Family for Life. Give us a call at 800-351-4877.