Here are the best ways to spend your $1,200 government stimulus check

By, now, you’ve probably heard that the United States government is issuing $1,200 checks to millions of people throughout the country to help stimulate the economy during the Coronavirus pandemic that’s keeping so many of us home and out of work. 

If you’re one of the millions who will be getting a check, you might be wondering how to best use that additional tax-free cash. 

If you’re struggling with debt or with paying your bills, this check might come at just the right time. But, there are a bunch of different uses for your stimulus check, not just paying your bills.  

Let’s take a look at the variety of ways to use this money, including a few ideas on giving that money a new charitable purpose if you don’t need it. 

The best ways to use your stimulus check

First, check to see if you’re eligible for the stimulus check. As CNBC writes, the IRS will use either your 2018 or 2019 tax return to determine your eligibility. This means that if you haven’t yet filed your 2019 return, the IRS will use your 2018 return instead.  

Eligible taxpayers will receive a $1,200 check for single individuals or $2,400 for married couples, along with an additional $500 for each child. Individuals who earned up to $75,000 that year in adjusted gross income are eligible. For a couple, that upper limit increases to $150,000. 

Here are 4 ways to best use your stimulus check. 

1: Pay bills

Right now, paying off your monthly bills is more important than paying down your debt (unless, of course, you’ve already paid off your bills). If you are struggling to pay bills, then use this money to ensure your month-to-month expenses are paid on-time to avoid late fees and penalties

In addition, several mortgage and credit card companies are waiving fees and giving people extensions to pay their bills due to hardships related to the virus. If you need extra time, call those companies and ask about exceptions that they can make because of the Coronavirus quarantine. Many times, customer support representatives are authorized to make these exceptions over the phone. All you need to do is call. 

2: Pay down debts

If you have a good handle on your month-to-month bills, then focus your attention on the next most important thing: your debts. Debts include credit cards, auto and student loans and mortgages, and they are one of the most common sources of financial stress in the United States, especially when so many of us are out of work. 

According to Debt.org, the total consumer debt in the U.S. is rapidly approaching $14 trillion. Our mortgages tend to account for the majority of our debt, followed by student loans, auto loans and credit cards. In other words, debts are big business in the United States. 

Use your stimulus check to pay down your highest interest debts first

For example, focus on the debt with a 15% interest rate before paying off the debt with 5% interest because your higher interest debts cost you more money month-to-month

Get rid of high interest debts as quickly as you can.  

3: Buy stock

“Buy low, sell high”. In the stock market, wealth is built by buying stocks and hoping that the value of those stocks increase over time. Historically, the stock market increases more than it decreases, and when we buy into the market when stock prices are lower, we stand the best chance of building wealth, fast. 

Today, stock market values are around where they were back in 2017. According to the recognized “buy low, sell high” theory, this might be a good opportunity to invest. 

Note that there is always inherent risk when investing in the stock market (or anything else). Consider speaking with a financial advisor who will take a look at your individual goals and financial position and make personal recommendations on how to best invest your money.

4: Spend it

Believe it or not, just spending that money may help spur on the economy. But, here’s the rub: try to spend your stimulus money with businesses other than the big names, like Amazon and Walmart. I love the convenience of Amazon as much as the next person, but they aren’t exactly struggling at the moment.

In fact, their business is booming. Right now, the big guys don’t need the help. 

I talk more about this in the following section, but strategically spending your stimulus check at struggling or local businesses will help them generate cash flow they desperately need. 

If your local favorite restaurant is open for take out, grab a meal or two with your check. Maybe your local produce stand is struggling due to the sudden lack of “foot traffic”. Stop by and grab some fresh produce. 

Any time that you can spend money with a local, small or struggling business, do that instead of placing another order at one of the bigger retailers or warehouses.  

Don’t need your stimulus check?

Now, here’s an interesting question. What if you don’t need your stimulus check? If you’re not looking for extra help paying your bills, and your debts are manageable and you’re not going to invest extra money right now, how can we best use that money for the greater good?

Here are three ideas to give that money a charitable purpose. 

Idea #1: Make a charitable donation

One of the most straightforward and common ways to give your stimulus money away is to make a charitable contribution. 

These contributions can generally be made online, and we have the freedom to choose any charity that we like. If you’d like to make a charitable contribution but you’re not sure what charity to pick, check out Charity Navigator‘s page for help deciding where your stimulus check should go.

Idea #2: Start an investment account for your kids

Deposit that stimulus check directly into an investment account for your kids, and use today’s uneasy stock market as a teaching tool on the power of compound interest, but also the risks naturally inherent in investing. Make it a point to continue showing your kids the value of their investment so they can see firsthand how investments build (and sometimes shrink) over time. 

Idea #3: Spend it locally

The next time you’re looking for something on Amazon, check to see if you can pick that item up in your local community rather than clicking that ‘Buy Now’ button. Local small businesses need help now more than ever, and reinvesting your stimulus check into your local economy is one of the best ways to support mom and pop shops during this economic downturn. Not only will you help support a local business, but you might be surprised at how many of the things you use on a daily basis are available right there, close to home.