Sense & Centsibility Blog
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Five Smart Ways to Use Your Federal Stimulus Check

To ease the economic impact from COVID-19, the federal government passed a $2 trillion spending bill in March. As I’m sure you’re aware, part of this law granted Americans a one-time stimulus check. Individual tax-payers who earn up to $75,000 are eligible to receive $1,200, while married couples who file jointly and earn up to $150,000 are eligible for $2,400. Adults with dependent children ages 17 or younger will get an additional $500 per child.

For many Americans, this stimulus money is critical to remain afloat financially, and they will need to use most of the funds for basic needs and staying current on bills. For those not financially impacted by COVID-19, this might provide extra cash on hand. No matter your current financial situation, it’s important to use your economic impact payment wisely. Below are five ways to successfully manage your stimulus check:

1) Emergency Savings

Whether you are still working or collecting unemployment, it is smart to prepare for emergency expenses. If you do not have an emergency savings fund, now is a great time to build one. If you already have money in savings, add to it. If you can afford to, take at least one-third to one-half of your check, and deposit it into that fund. A good goal is to have at least $1,000 in emergency savings. Ultimately, you should have a fund equal to six months’ worth of expenses in case of a job loss or reduction in income. Savings is crucial to avoid building up debt.

2) Pay Down High Interest and/or Low Balance Debts

Do you have any credit cards or other debts with an interest rate of more than 8%? If so, consider paying down one of them. Or, if you have a small credit card balance, and your stimulus check is more than the total debt amount, you could pay that debt in full. This would mean one less monthly payment.

If you do pay off that small debt, consider the “power payment method” for other debts. This means taking the money you normally would pay on the smaller debt and putting it toward either the next smallest debt or the debt with the highest interest. Which debt you pay down depends on whether you need to free up more money each month in the short run or save more in interest payments in the long run.

3) Pay Extra Toward Student Loans, House Payment or Vehicle Loans

If you feel like you have enough in savings, consider paying extra towards your mortgage, car loan or student loans. Focus on the debt with the highest interest. Even one extra loan payment helps reduce the time it takes to pay off that debt. If you can do it once a year, that is even better.

4) Invest in Retirement

This might be the perfect time to either kick-start your retirement savings or give it a boost. Put some of this extra money into an Individual Retirement Account (IRA) or a similar type of savings account. Keep in mind that during retirement you will need assets and income that provide about 80% of your previous paycheck.  

For more information, check out NerdWallet’s retirement guide and the retirement page of If it is affordable, meet with a legitimate, certified financial planner who charges by the hour and does not have either up-front or back-end fees.

5) Invest in Yourself

This could also be a great opportunity to improve your credentials to advance your career or develop additional marketable skills. Here are a few websites that offer such opportunities and are relatively inexpensive:

  • offers a host of courses taught by top instructors from world-class universities and companies. Professional certificates start as low as $39/month. There are also hundreds of free courses, along with on-demand video lectures, homework exercises and community discussion forums.
  • LinkedIn Learning offers more than 16,000 courses taught by real-world practitioners in business, technology and creative skills. If you sign up as a new customer, you will receive a one-month free trial, then pay $30/month thereafter. Adobe, Google and Amazon Web Services also have certification classes.
  • might be the route to take if you just want to develop a certain skill. There is a wide variety of courses to choose from, such as drawing, web development, and Photoshop for beginners. Courses are quite inexpensive, and Udemy periodically offers deep discounts.

Contact LSS for Support

If you would like help determining how best to use your economic impact payment, contact LSS Financial Counseling. Our experienced financial counselors will review your overall finances and provide options so you can make an informed decision. Call us at 888.577.2227, or get all your support online at your convenience.

Author Ray McCoy is a Certified Financial Counselor with LSS Financial Counseling.