What To Do With Your Second Stimulus Check

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.

6 Things To Do With Your Stimulus Check

Of note, a version of this article first appeared on Doximity’s OpMed.

The federal government has started sending out stimulus checks of $1200 to all Americans with an adjusted gross income of less than $75,000 a year for singles and 150,000 a year for married couples. Although the amount of the stimulus decreases for those who make above $75,000 a year and is completely phased out for those who make over $99,000 a year, many people will be seeing a bank account boost, if they haven’t already. Here are 6 things you should consider doing with your stimulus check:

1.     Pay bills and buy necessities. With over 22 million people filing for unemployment over the last 4weeks, many people are seeing a sharp reduction in their income and may be relying solely on government assistance. This $1200 may be just what people need to cover all their bills during this time. It may also help newer physicians and healthcare workers with any extra expenses we might be facing such as increased transportation costs to and from the hospital or increased food costs as we pay for more take out & delivery services. Others people may have children or a spouse they are helping to support and may need to use this money to pay a babysitter or cover other childcare fees. Regardless of what the expense is, we should all use this extra money to cover any bills we would have had difficulty paying otherwise.

2.     Create an emergency fund. Saving money for an emergency fund it a little bit like trying to eat healthier or lose weight. We know we should do it, but we’re always tempted to put it off. Why not use this stimulus check to finally get the ball rolling? Although many of our jobs are salaried and thus our income seems guaranteed, an emergency fund is still useful. You never know when the car might break down, the house needs repair, or our cell phone stops working. While these inconveniences may not bankrupt us, having money set aside for these seemingly inevitable, unpredictable expenses is a good use of our money. According to finance guru Dave Ramsey, the minimum amount of money in any emergency fund should be $1,000 and many financial planners advise patrons to have about 3 months of expenses in cash available at all times. This stimulus check is a good starting point.

3.     Pay down your debt. If you have any consumer debt like credit card bills or car loans that have an interest rate of higher than 8%, use this money to pay down the debt. The sooner you are able to eliminate your consumer debt, the quicker you’ll be able to build wealth and become financially independent. Instead of sending hundreds of dollars a month to a credit card company or car dealership, after paying off the debt you can instead use that money to increase your savings, invest, and fund future trips and vacations. With the Coronavirus pandemic, you may even be able to refinance loans at a lower interest rate which will allow you to pay off the balance you owe even sooner.

4.     Spend it when the economy bounces back. Whether it’s gifts for your kids or a much-needed family vacation, one of the things you could do with the money is simply spend it. Now for those who already buy way more things than they need, perhaps this isn’t the best idea, but for others who have a budget in place and are meeting all of their saving goals, using some of the money to “treat yo’self” may not be a bad idea. Many of us have been on the front lines of this pandemic and have sacrificed a great deal to help care for others. Despite the increase in hours, workload, and mental stress, many jobs don’t include any sort of bonus pay for times like these. Instead of feeling like you have to always put others before yourself, why not consider going against then grain and spending part of the stimulus money on yourself or those you love? Perhaps you’ve delayed buying those air pods you see your colleagues wearing at work. Maybe you’ve always wanted to travel overseas with your family, party in Las Vegas with your friends, or go wine tasting with your significant other. We all work hard and deserve a break. Why not use part of this check to do something nice for yourself?

5.     Prepare to invest it when good opportunities arise. Although the economy is down right now, it won’t be this way forever. Once the pandemic begins to subside and the prevalence of the virus decreases, the economy will start to bounce back. Why not use this money to prepare for when it does? Using this stimulus check, along with any additional money you may have received from your tax return or previous savings might leave you with a nice sum of cash to invest in various opportunities. Perhaps you’ve considered investing in an intriguing business idea, purchasing a rental property, or simply want to increase your investments in the stock market. Using this stimulus check as a jumpstart for your future investments might be a good use of this money.

6.     Give some of it away.  I’d be remiss, and a bit selfish, if I didn’t mention that one additional thing you could do with your check is give part of it away. For those of us who are in a good financial position, giving part of the money away to our friends and family who may be less fortunate may also be a good use of this money. While many of us have financial goals or fancy trips we’d like to save up for, we can all think of at least one person in our life who could use a little extra cash around this time of the year. Perhaps we could commit to giving at least a small portion of the money away or buying someone we love a nice gift. As the biblical saying goes, “We are blessed to be a blessing.” Why not use this money to provide a small token of love to someone else?