How to Make the Most of Your 600 Stimulus Check

How to Make the Most of Your 600 Stimulus Check

Americans have started receiving their $600 stimulus checks. If you have healthy savings, cash may be a useful way to help you get began in hands-on investing. A safer option is to purchase into a mutual fund that’ll diversify your investments for you. You can utilize the money to purchase stock in a company that interests you. This carries a lot more risk but is the best way to learn about how the market works.

Here is how to make the most of your 600$ stimulus check

 

Address your most urgent needs first
Before anything else, you should make sure that your instant needs are first met. This contains food, monthly bills, rent, and mortgage. But before you prefer rent over food, consider that jurisdictions, banks, and utility companies are offering relief because of the pandemic. See which programs you can take benefit of, then allocate funds accordingly.

Start or add to an emergency fund
It cannot be stressed enough how necessary it is to have an emergency fund. As this pandemic shows, the world may change rapidly. The fund needs to be equal to the amount of money spent on expenses for 3-6 months. While the stimulus check will not cover that total amount, it may be used as a starting point. If you dipped into or even exhausted your emergency funds, the stimulus check may help get you back on track. A simple savings account can be utilized to keep the money safe.

Save for Retirement
Socking away money for retirement is a smart move. The maximum contribution for a 2020 IRA is $6,000 to $7,000 if you are 50 years old or older so you can stash the stimulus check there if you do not need it for anything else. Specific areas of the stock market remain underpriced as they recover from deep 2020 losses. However, you can consider to invest in a target-date fund, and it will invest in stocks and bonds, which is based on how many years that you’re away from your retirement.

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Support Local Businesses
Purchase a gift card for a local restaurant and other small business that is forced to close or scale back operations due to the coronavirus pandemic. That will offer the business much-needed cash during the shutdown, and you can utilize the gift card to treat yourself to a meal and massage when the pandemic is behind us.

Remove the credit card debt and loan balances
One way to secure your financial future is to decrease your debt. An important payment made to pay down a credit card and loan will help decrease the interest amount paid on an account carrying a balance. The less interest you have for paying, the additional funds you will have available in the future. But before you do that, check with the debt holders because some are providing relief, including deferred payments and waived interest. Make sure to read the fine print, as some of the assistance offered can delay interest instead of forgiving it.

Long-term investment account for your child
Part of the relief package offers money per child. If your family is comfortable, there is a way to make use of that money to help the future of your child. If you do not need this money, consider opening a 529 plan for your kid. Your state can provide a tax benefit. This money can grow tax-free. If ok, you can contribute modest amounts of, say, $50-$100 regularly. Fora 529 plan, contact your bank or investment firm to see what they’ve available and what benefits will come your way if you open one.

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Gift some or all of it to those who are in need
Those people who are fortunate enough and they do not need this money should consider giving it to people who need it. There are several charities fighting the pandemic, like food banks and hospitals. Another idea is to help friends or family members who need it.

Set some funds aside for paying the 2020 taxes
Tax season has started, and it is obvious that the IRS won’t postpone tax filings like it’d last year. This means taxes will be due in 2 months at the latest. Stimulus checks won’t be taxed, as per the IRS, but unemployment benefits will be. If you do not need to use the money instantly, keeping it around to help with your taxes will help lessen the sting when it comes time to pay.

Give It Away
If your job is secure, then you should consider using the stimulus check to aid those people who really need it. You can deduct a portion of donation on the 2020 or 2021 tax return if like most taxpayers you claim the standard deduction. That is because there is a new above-the-line deduction for up to $300 of cash donations. But the deduction is available for donations that are made in 2020 or 2021.

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