Economic impact payment, stimulus check, COVID relief… your federal stimulus check goes by multiple names. The most recent payment is part of the American Rescue Plan Act providing much-needed relief to individuals, businesses, programs, and others struggling with unemployment and other financial stressors. The eagerly-anticipated payment provides up to $1,400 for Americans who qualify.
If you are wondering how best to use your stimulus check to your advantage, you’re not alone. Your experts at Liberty Bay are ready with advice for getting the most out of your third economic impact payment.
1. Pay for your necessities
An essential first step in budgeting your finances is identifying your most urgent expenses. Vital needs include groceries, house supplies, housing, and utilities. Your $1,400 economic impact check may not cover every financial necessity, but it can certainly help cover critical expenses or buy you some time.
If you are one of many Americans who have been enduring financial hardships due to the pandemic, let us help you find the right resources to stay afloat in this challenging period.
- Know your rights: the CDC eviction moratorium order may protect you from eviction or non-payment of rent. Check online to see the latest updates and extensions.
- Unemployment resources: the American Rescue Plan Act extended unemployment benefits under the CARES act. Learn more about the benefits and qualifications.
- Check if you are qualified for the Child Tax Credit (CTC). The CTC was expanded in the 2021 act, although it is unclear when and how often you will receive payments.
- Read Liberty Bay’s resources on 8 Simple Ways to Stretch Your Unemployment Income
Questions about resources not listed here? Contact our team, and an LBCU expert will be in touch soon to provide answers and assistance.
2. Pay down your debt
Managing your debt is vital to your financial health. Credit cards, loans, mortgages, and other forms of debt often come with high-interest rates that cause you to pay more than you should have to. Some lenders are currently offering forms of relief such as payment deferrals or waived interest to help with pandemic-related financial hardship, so make sure to check with them first.
If you are in a good position to reduce debt, the economic impact payment can help you make a dent in your balance. You should decide on a strategy that works best for your situation.
For example, if you have many small debts with similar interest rates, consider starting with your smallest debt and eliminating your debts one by one, also known as the “snowball method.” If you have debts with varying interest rates, especially if your largest debt has the highest interest rate, you may want to try the “avalanche method.” In the avalanche method, you would pay the minimums on all your debts while working on eliminating your largest debt first.
3. Prepare for taxes and expenses
The IRS has extended 2021 Tax Day for individuals to May 17, 2021. If you haven’t filed yet and are not sure if you might owe money, you may want to consider setting some of your stimulus check aside just in case. The extended tax filing deadline may also help you use some of the American Rescue Plan’s tax benefits, such as the expanded child tax credit mentioned above.
Use Liberty Bay’s FA$Ttrack course on Taxes: The Basics to learn more about why taxes are important, how to stay on top of them, and steps to take for filing.
4. Save & invest
One of the many lessons we have learned from this pandemic is that the world can change quickly and unexpectedly. If you don’t have a savings account or have had to dip into your savings this year, your economic impact payment can help you build emergency savings to better prepare for the unexpected.
Saving and investing in your future is one of many healthy financial habits you should work on. If you are on the younger side with retirement far from your mind, you should know it’s best to start planning for retirement early. If you are planning for your family’s future, it’s essential to save and invest with good sense for those situations as well. This can include college savings for your kids or becoming a financial caregiver, among other possible circumstances.
Investing in yourself in other ways is also a good idea. Your stimulus check gives you a chance for some self-care; mental, physical, and financial health all go hand in hand. Of course, it’s important to practice financial responsibility – but that doesn’t mean you shouldn’t treat yourself now and then!
5. Help others
If you are fortunate enough not to need your stimulus check, perhaps consider paying it forward to support others who do. After all, here at Liberty Bay, we’re all about Uncommon Courtesy: about going out of your way to make someone else’s life better. Here are some ways you can help others with some or all of your economic impact payment.
- Donate to organizations fighting the pandemic. Food banks, homeless shelters, hospitals, and charities of all types have had to adapt and respond to the pandemic for over a year now. Supporting your community, especially local organizations supporting others, is a wonderful way to use your COVID relief check.
- Support small and local businesses. Restaurants, independent shops, and other small or local treasures have been affected by the pandemic and ongoing safety measures that limit how efficiently they can operate. Each purchase you make from a small or local business is a show of support that helps them stay afloat.
- Check with friends and family. Do you know anyone personally who has been hit hard by the pandemic? See if you can give them some financial support or help them out in other ways, like buying them a meal or some groceries.
Remember, your Liberty Bay experts are just a phone call or email away if you have any questions or need help. Contact our team to get the answers or assistance you need to achieve your goals and improve your financial health.