With the passage of the newest coronavirus relief package, many people may have just gotten another stimulus check. Although there is ongoing debate on whether the amount should be increased to $2000, many people have already seen a direct deposit of $600 into their bank accounts. If you’re a resident physician like me, or a young professional in an entirely different career, you may be wondering what to do with this extra money. Here are some ideas:
Put it in your emergency fund. Many of us were fortunate enough to keep our jobs during the pandemic. We might have also been able to work from home part of the time, which saved us time and money from not having to commute. However, life may not always be this way. None of us can predict the future and although things may look promising, we still need to be prepared in case things take a turn for the worse. Since many of us may still be able to pay our current bills without any financial strain, why not use the $600 to protect ourselves in case things change? General advice is to keep 2-3 months of expenses in an emergency fund for a “rainy day.” For many young professionals, saving $1000 is usually the starting point or first goal. If you don’t yet have this much money in your savings account, then perhaps you should consider using this second stimulus check to beef up your emergency fund.
Pay down one of your debts. It’s January, which means the holiday season has just passed. If you’re like many Americans, you many have spent a little more than you anticipated over the last month. Perhaps you purchased things on your credit card and have been shocked at the pending balance you now have to pay off. Rather than letting interest accrue on the card, which will cost you even more money in the long run, consider using this stimulus check to pay down your debt by paying off one of your credit cards. If you don’t have any credit card debt, consider paying down your car loan or student loans. Either way, if you have debt, using this stimulus check to pay off part of it, is something you should strongly consider.
Invest it using a brokerage account. In case it wasn’t clear, I too got a stimulus check. If you’re wondering how a doctor like me qualifies, it is because the stimulus check income limit applies to the 2019 year and I was a medical student for half of that year. The other reason, is because even now, I am a resident physician who gets paid much lower than attending physicians (because technically speaking, I’m still in training). I explain this because as a young professional with a decent salary, I still have my job and I also have a decent amount in a savings account. I’m already paying down debt and have a financial plan in place. Since many of my basics are already taken care of, one of the things I wanted to do with the stimulus check is invest it. My goal is to use this money to make even more money. Thus, I opened up an investment account to purchase index mutual funds (which is a fund that buys most if not all of the top stocks). Although there are different types of investment accounts I chose to prioritize a Roth IRA to allow the money I make to grow tax free. So instead of picking one stock like apple or google to purchase, I now own a small portion of them all. Some of my colleagues who already max out their retirement accounts have chosen to invest the money into a taxable brokerage account using apps like Robinhood, Stash, or Acorns. Regardless of which brokerage account you choose, investing the stimulus check gives you the opportunity to see your money make even more money in a way that increases your net worth.
Use it to support local businesses. One group of people who may have been negatively impacted by this pandemic is small business owners. Some of them may not have had access to the limited loans given out by the government or perhaps they received that assistance but it has now run out. Due to the nature of the virus, many people are less likely to eat inside of a restaurant and may be tempted to purchase things online from retail giants like Amazon and Target instead of purchasing things in person. Because of these changes, business owners may be experiencing a decline in revenue. One of the things you should consider doing with your stimulus check is trying to support those people. Perhaps you can buy lunch from a local food shop or go visit the bakery nearby?
Give part of it away. One of the things you should consider doing with a small portion of your stimulus check, is buying something for someone else. Perhaps there is a charity you can donate to? Maybe your college is accepting donations for a new scholarship fund? Perhaps one of your close friends is struggling and you can do something nice for him/her? Regardless of which route you choose, why not use a portion of this money, to help someone else? It could be as simple as buying a coffee for the next person in line at Starbucks, or giving a little extra money in your church’s collection plate. Over the next month, I challenge you to do at least 1 nice thing for someone else with your stimulus check. You might be surprised by how good you feel afterwards.