Written by Nikki Ducas
By the time you read this, your first payment of the $2.2 trillion stimulus bill may already be deposited into your account. Some people will receive a one-time payment of up to $1,200 while married couples rake in $2,400. Additionally, parents could see $500 for each child under 17. If you are eligible for a stimulus check, how will you spend it?
As COVID-19 continues to ravage our community and economy forcing businesses to close and scores of people to file for unemployment, the money will undoubtedly go toward these sudden emergencies. For many, the money is as a financial life preserver to pay for medication, groceries and other critical expenses.
If you’re fortunate enough to have income and at least a three-month emergency fund, my financial planner suggests putting the money toward paying down debt, then investing into your IRA, 401(K) or a brokerage account. If you can take a long-term view and can manage without needing the money for at least a year, buy high-quality stocks that are much cheaper now than they were two months ago. This is a recipe for success. But if you do the need the money, keep it in cash or in a safe place without risk.
My advisor is optimistic that brighter days are sooner than the worst-case scenario predicts. Since there is a unique reason for the economic pause, the turnaround will not be immediate but quicker than many predict. The government needs to make good choices and continue to bridge the gap while the rest of us do our part by social distancing. Accomplish those things and he believes May starts the return towards a new normal, and by fall, we may have new weird procedures, but it will be more normal than today.
My family plans to divide the money into thirds–give, save, spend. We plan to donate to local charities, spend money locally and then save or invest the remaining third. I took a Facebook poll and majority of respondents say they plan to save their money short term to see what happens to the economy, then pay off debt/loans or use it toward a new vehicle or home repairs. But those who plan to spend their money want to pour every cent into local businesses for home improvement (i.e. tree removal, carpet cleaning, new windows, repair man).
Just remember there is no one size fits all; every person’s situation is different. Despite being quarantined at home, we can get through this together.