The federal government has begun to send out stimulus checks of $1200 to all Americans that had an adjusted gross income of less than $75,000 a year for individuals 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, most residents and fellows will qualify. So in case you weren’t aware, many of us will be getting a direct deposit of $1200. Now that you know you’re getting it, here are six things you should consider doing with the money:
Pay Bills and Buy Necessities
Although we all make more than the median American household, none of us are “ballin’ out of control,” not on a resident’s salary at at least. In fact, some of us may live in areas with a high cost of living like New York City, San Francisco, Seattle, or Washington, D.C., in which making ends meet on our current pay can be quite challenging at times. This $1200 we’re about to get may be just what we need to cover all of our bills. It may help with extra expenses such as increased transportation costs to and from the hospital, or more takeout and delivery services since our work hours may increase and leave us with less time to cook/meal prep for the week. Others of us may have children and may need to use this money to pay a babysitter or cover the fees to hold our child’s spot at the daycare center. Regardless of what the expense is, we should all make sure we use this extra money to cover any bills we would have had difficulty paying otherwise.
Create an Emergency Fund
Saving money for an emergency fund is 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 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 three months of expenses in cash available at all times. This stimulus check is a good starting point. You’ll be amazed at how much stress is relieved when you realize you have the money to cover even the most minor of expenses.
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. During the pandemic you may even be able to refinance loans to get a lower interest rate which will allow you to pay off the balance you owe even sooner. One way to build wealth is to decrease your liabilities (by paying down debt) or increase your assets (by investing). Since the stock market is down right now and investments may be uncertain, why not take the “safe” route of building wealth by paying down debt?
Spend It When the Economy Bounces Back
Whether it’s holiday gifts for family 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 patients. Despite the increase in hours, workload, and mental stress, our salaried positions 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 spend part of the stimulus money on yourself or those you love? Perhaps you’ve delayed buying those AirPods 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?
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.
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?
Dr. Altelisha Taylor is a family medicine resident at Emory University in Atlanta, Georgia. She has a passion for primary care sports medicine and enjoys writing articles on personal finance and health policy for several other media outlets including her blog, Career Money Moves.
Illustration by Jennifer Bogartz