8 things financial planners say you should do with that stimulus check

Receiving that first stimulus check is equally exciting and thought-provoking; it’s not everyday you wind up with such a significant windfall in your lap and while it’s technically meant to stimulate the economy, what is the best option for your personal finances or lifestyle?

If you’re hoping to make the most of your stimulus check, we’ve got you covered. Below, we reached out to some of the top financial planners and consumer finance experts in our network to get their insights on exactly how to make your check go as far as possible.

Whether you’re hoping to splurge (good news, you’re allowed!), save, or something in between, here are the smartest options for putting those dollars to work.

Put it toward your existing debt

It might not be the most exciting option but if you’re sitting on any high interest debt, you might want to consider putting your stimulus check toward paying it down you’ll be thankful in the long run. Mason Miranda, Credit Industry Specialist, suggests starting with your debts with the highest interest rates, like credit card balances.

“Pay off all your debts with the highest interest rates first, which will save you the most money and help you pay off your debts faster,” says Miranda. “This is known as the Avalanche Method of debt repayment.”

According to Miranda, credit card balances should be a high priority, since they tend to have the highest interest rates on the market. After paying off your credit card balances, continue paying off your statement balance each month, rather than carrying a balance and accruing interest.

From there, Miranda suggests working on any debt that’s left, including mortgages, student loans, personal loans and car loans. “The more you can put towards principal on loans and other debts, the faster you’ll pay them off. This saves you a lot of money in interest, and can free up those monthly payments to be put towards other necessities.”

Treat yourself (responsibly!)

You’ve seen the memes about spending your stimulus check on a Louis Vuitton handbag or a luxury trip once you’ve been vaccinated and while it might seem frivolous and unnecessary, it might not be that bad of an idea.

“The first thing you need to do is to set aside 5-10% of the money for a splurge item,” says Kari Lorz, Budgeting & Saving Money Expert .”Yup, making ‘the most’ of it means taking care of ourselves in these crazy times, and it’s amazing what a little TLC can do for our mental wellbeing.” So a splurge dinner, a massage, some supplies for your favorite destressing hobby are all great options. Set that money aside!

Beef up that emergency fund

“Before you spend anything, I want you to first beef up your emergency fund to 6-9 months of living expenses (at a minimum); a year’s worth is even better!,” says Lorz. “No one ever said, ‘Gee, I have too much in savings’ during the pandemic!”

Invest in an asset that will make you more money

According to Financial Blogger Stacy Caprio, one smart way for people to spend their tax refund is on an asset that will make them more money.

“This could mean they put their refund as part of a down payment on a rental property that can make them monthly income and appreciate over time,” she explains. “It could also mean putting the money toward starting a business, investing in dividend paying stocks or anything that will return an income or grow and appreciate in value over time.”

Set up your will

“Even if you don’t think you have enough money, you need a will to ensure your wishes are met in the event of your unexpected passing,” says Andrea Woroch, Consumer Finance Expert. “A will explains how your personal assets and belongings should be distributed, how your healthcare and finances should be managed and who will care for your kids.”

It might not be the most sexy thing to start thinking about but without certain legal documents in place, things become more stressful and confusing with family members when you pass and setting up your estate plan will give you that extra peace of mind.

Buy life insurance

Likewise, if you have a partner or children (or even parents) who rely on you financially, a term life insurance policy will protect their future to ensure you’re caring for them even when you’re not there.

“You can use a small portion of your stimulus payment to create financial security for those you love by purchasing a term life insurance policy,” says Woroch. “It’s actually quite affordable! A typical $500,000 term life insurance plan is about $23 a month.” That’s a small price to pay for peace of mind and financial security!

Invest in yourself

According to Lawron DeLisser, Profitability and Business Growth Strategist and CPA, one of the most responsible ways to use your stimulus check is to invest in yourself, particularly your health. Yes, you can enroll in the course or start the business you always wanted. However, your health is your greatest asset.

“Get that check-up you’ve been putting off. Go to the dentist. Enroll in a gym or workout program. Purchase healthy foods for you and your family. If we’ve learned anything during this pandemic it’s that our families and our health are truly the most important thing!” says DeLisser.

Consider donating your check to charity

If you’re one of the lucky folks who have continued to see regular paychecks, business growth, and have come out of the pandemic relatively unscathed, you could consider donating your check to a charity that you’re passionate about.

“I have donated my stimulus checks (as I will the next check) to groups that support Indigenous, immigrant, and Black communities who are living in poverty and have borne the brunt of the pandemic,” says Career Coach Katherine Golub, MBA, PCC. “My career coaching business has continued to thrive during the pandemic, and I continue to earn plenty to reinvest in my business. I therefore feel it is my responsibility to give back.”