According to the U.S. government, a majority of Americans will soon be getting a stimulus check, or “economic impact payment” as they call it, in part to help the economy during the current pandemic. 

Individuals making under $75,000 will receive $1,200; couples making under $150,000 will receive $2,400.  Each child in the home under 17 will receive $500.  Amounts will be prorated for those making $75,001 to $99,000 and $150,001 to $199,000, respectively. 

This is an unexpected amount of money, so how should you use your stimulus check?

If You’ve Lost Your Job

If you’ve lost your job and will likely need to file unemployment, you’ll likely need the money just to help you stay afloat. 

However, before you pay any bills, make sure that you’ve checked to see what companies will allow you to delay payment.  Credit cards and utility companies may be willing to work with you during this time. Student loans will be paused for 6 months, and even some mortgage companies are allowing you to pause your payment. 

If you can hold on to some of this money, do so.  We don’t know what the upcoming months will bring.

If You Still Have Your Job

If you still have your job, you have more flexibility with what to do with this check. 

If you have debt, generally, applying a windfall to debt is a smart idea. 

However, in these current times, you may NOT want to follow that advice.

Emergency Fund

Do you have an emergency fund?  If you don’t, or if you do but it’s small, you may want to put this money directly in your emergency fund simply because we don’t know what will happen in the near future.

My husband still has his job and is still getting paid, but when we receive our checks, we are immediately putting them into our emergency fund. 

While my husband’s job is secure now, because his job is funded by grant money, he may not have a job in a year or two.  Therefore, we’re trying to bulk up our emergency fund for the unexpected. 

We’re in unprecedented times, and there is no way to know what the future holds.  Maybe in a few months, things will be back to normal and the economy will pick up again.  Or, maybe this drags on for awhile, small businesses close permanently, and when it’s over, the economy will take awhile to recover. 

We just don’t know, so in these situations, it’s best to have a robust emergency fund.

Debt Repayment

A prudent idea, if you have a fully funded emergency fund, is to put some of the money toward debt repayment. 

The less debt you have during turbulent times such as these, the stronger your economic position will be.

Infuse The Local Economy

Another idea is to put some of your money into the local economy to help businesses stay afloat. 

If you used to eat out a lot before social distancing, consider supporting your local restaurant with a take out order.

Our family never ate out much, so we’re not spending that way. However, our daughters’ gymnastics studio has given the families options of paying their full tuition monthly even though there currently aren’t classes, and then having tuition discounted for the rest of the year when classes are in session.  I will happily do this to help this small business stay afloat during this difficult time. Consider spending some of your money locally.

Give To Charity

A final option, if you still have your job, is to consider giving all or part of your stimulus check to a family that is currently unemployed, or to your local charity.

We all go through times where we need help, and if you have extra now it could be nice to help someone else.

With A Stimulus Check Comes Important Decisions.

If you’re getting a stimulus check, you have important decisions to make. 

While this is a windfall, so to speak, it’s also a lifeline. 

Make sure to spend it wisely and in line with your financial beliefs.

Lily used to work in accounting, but when she had her second child, she became a stay-at-home mom. 

She and her husband, Paul, had two more children, and Lilly stayed home with them. 

When her oldest was a sophomore in high school, she decided to return to work. 

She and Paul were concerned about putting four children through college and figured the extra income would help.  However, there’s an important reason why long-term stay-at-home parents shouldn’t hurry to enter the workforce.

Why Parents Shouldn’t Hurry To Re-Enter The Workforce If They Have Children Going To College

If you’ve been a stay at home parent into the high school years and then enter the workforce, your two incomes will both be counted when it comes to college financial aid, even if you’ve only had that income for a year or two before applying. 

That means even though you don’t have much discretionary income because you’ve been scrimping for years on one income, you’ll still be evaluated as if you do. 

In fact, “generally speaking, if you’re a dependent student, every $10,000 increase in your parent’s income (above the income protection allowance) will cause about a $3,000 decrease in need-based financial aid” (Edvisors.com).

Keep in mind that when you return to work, not only will 30% of your new income be earmarked for college tuition, but you’ll also need to pay taxes and other expenses from your paycheck. 

Add in the increased expenses such as gas, work clothes, dry cleaning bills, etc., and you may find after running the numbers that you won’t actually take home much of your new salary.

Depending on the type of job that you do and the amount of money that you make, continuing to stay home while your child is in college may be the smarter choice.

Why You Still Might Want To Go Back To Work

The decision to go back to work or stay home isn’t black and white.  There are a variety of factors to consider.

Weigh The Pros And Cons

Of course, choosing to stay home or return to work is a personal decision.  It will largely depend on the amount of money you can potentially make, your current financial situation, and your own desire to return to the workforce or to continue to stay home.

If you choose to stay home and your children are now largely self-sufficient, this may be the time to practice other cost-cutting measures that can help your spouse’s income go further. 

Or, if you’d like to prepare for a job once your child is in her senior year of college (and no longer needing to file financial aid paperwork), this might be the time for you to also pursue your own education. 

Perhaps you can earn the degree you never finished so you’ll be prepared to enter the workforce again when your child graduates from college.

Go To Work At A College

If you and your spouse decide returning to work is the best decision knowing how much the college will require of your new income, you could choose to find employment strategically. 

If you can find a job at a community college or a university, your child would likely receive a hefty discount. 

My husband is employed at a university, and one of his benefits is that our children can attend the university, or two other participating universities in our state, with a 75% discount for tuition. 

That means that currently our children will only be charged approximately $3,000 per year for tuition.  They will save nearly $9,000 a year, which is an excellent reason to consider working at a community college or university.

Remember that community college or university jobs do not have to be teaching jobs. Many members of my extended family were employed by our local university, and they had a variety of jobs including secretary, lawn maintenance and food service.

Paying For College Makes Going Back To Work A Complicated Decision

If you feel the pressure to return to work to pay for your child’s college education, run the numbers and first learn how much you’ll actually take home. 

Also, consider working at a college or university to reduce the amount of money your child will have to pay to attend college.

Have you recently had to face a decision to go back to work, or not go back to work based on how it would affect your child's student loans?

Long-term investments usually offer higher profits compared to quick sale options with tax advantages. Not all products are tax exempt and some of them have strict requirements and limitations on the amount invested. Before individuals consider investing in any investment option, they must educate themselves and rely on the expertise of a reputable financial planner or investment adviser. It will most likely ensure they’re building a diverse portfolio to minimize risks and receive the highest return as possible.

The main goal of investing is to earn money for future retirement, college education, to purchase a home, and/or to supplement monthly income.

Financial planners and investment advisers can help potential investors with the planning process and to build a strategic portfolio. They are knowledgeable of national and international markets and the different securities structured for establishing portfolios that produce positive returns. The most important reward of some options is its incentive of reducing tax liabilities.

Tax-free investments comprise mainly of employer retirement plans, health savings accounts, educational funds, savings bonds, traditional & Roth IRAs, municipal bonds and exchange traded funds (ETF).

Investment Options with Tax Advantages

Employer Retirement Plans include 401K and 403B which are long-term investment options. The way it works is an employer automatically deducts contributions from an employee’s paycheck during every pay period. The employer will match the amount of money to a specified maximum.

Health Savings Account or HSA is an investment that offers deferred taxes and free taxes earnings on spending which must meet eligibility requirements. It offers benefits of tax relief and reducing medical costs and expenses.

Education Fund 529 is an option for planning for future college and higher education. Its benefits depend on the investor’s location and the usage of invested money and gains. The amount of investment is tax-deferred when accumulated.

United States Saving Bonds are government-issued and exempted from taxes by the state and local governments. Interest income is subject to federal taxes.

Traditional & Roth IRAs are securities offered to investors for future retirement planning. Both IRAs have a limitation on the amount of contributions allowed for investing. Upon retirement, retirees don’t have to pay taxes on income.

Municipal Bonds finance spending for counties, cities, and states in the United States. Many investment advisers consider the option safe. The disadvantage is they offer lower returns compared to other options.

ETF or Exchange Traded Fund has tax benefits and can be complex. Prospective investors should hire an investment adviser with tax knowledge. Taxes associated with the bonds can vary.

People who are considering investing in US securities must educate themselves by reading investment strategy books and tutorials for a better understanding of how stocks work. It’s your hard earned money that needs protecting to ensure legitimate trading and investing. Take the time to investigate the different securities offered in the market and search for an experienced financial planner or investment adviser.

There are plenty of resources available online with tools to help educate potential investors on tax-free and deferred tax retirement investments.

The United States Government has plenty of information available on its website using various tools to research professionals in the industry and investment options. Write down what you expect from your invested capital in terms of earnings. During your planning, consider the timeline when you anticipate selling or cashing in investments. If you’re investing long-term in certificates of deposits (CDs) and IRAs, there are restrictions on when you can cash in on the earnings.

Of all US securities, government protection is available for Treasury securities only. The government doesn’t protect against any losses on other investment options. The investor takes the loss and has to deal with the financial consequences. That’s why an investment professional is important in advising and explaining the risks involved with certain investment options on the market.

Before contacting an adviser, write all the questions you need to learn about the options, its advantages, and risks. It will give you a better understanding of the whole investment process.