4 smart ways to spend your stimulus check to build wealth in 2021
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- If you expect to receive a stimulus check, there are a few ways you can use it to build wealth.
- First, use the money to pay bills or payments you're behind on. That's most important. If that's covered, use the money to fill your emergency fund or reach an investment goal.
- If you're on track with debt, saving, and investing, use the money to invest in yourself professionally, either through training, professional services, or wellness services that can improve your quality of life.
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Well, 2020 was a year. And as we close it out, the IRS and the Treasury Department have begun delivering the second round of stimulus checks to eligible Americans. Issued as part of a new coronavirus relief package, the payments are generally $600 for eligible singles and $1,200 for eligible married couples filing a joint return, with qualifying children receiving $600 each. (You will soon be able to check the status of your payment on the IRS website.)
Clearly, these payments won't cover your expenses for months on end (or even a few weeks). And it's also clear that stimulus checks can't erase large debts or major financial issues that may have occurred during the pandemic. But these funds can help you reach some goals in 2021.
Paying off debt and bills with your stimulus check
With millions of Americans unable to work due to the pandemic, and people coping with sickness and more, times remain difficult. So if you're struggling financially, that hardship is understandable. And your survival is most important.
If you currently have debt for major expenses like rent, your mortgage, or medical bills, you can put any extra funds toward these bills. And contact your landlord, lender, or other creditors to negotiate payment terms and next steps if you can't pay the balance in full. If you're struggling to pay basic expenses, consider contacting a charitable or government program for help.
Saving or investing your stimulus check
If your immediate debt is taken care of, but you're lacking in the emergency savings department, a good use of extra stimulus money could be to start or pad that stash. We now have overwhelming evidence that life can be unpredictable. So it's good to have a bit of a net to catch us if we fall.
Alternatively, if you've met your savings goals, you may decide to invest the stimulus money into an after-tax brokerage account to give yourself a shot at compounding interest for years to come.
4 ways to spend your stimulus check to boost your financial life in the new year
If your debt is managed, and you feel good in the saving and investing departments, consider using your stimulus payment to otherwise set yourself up for success in 2021.
Pursue personal-development opportunities
The stimulus payment can help you get ahead at work, or with your entrepreneurial journey, if you spring for a service that can increase your income or professional standing.
For instance, is there a side hustle that you've been wanting to explore, but you need to learn the basics of web design, writing, or something else? If you use stimulus funds for related workshops or classes, professional coaching, or even a respected certification, you can give yourself the chance to make more money after you've learned the new skills. You may be able to pick up new clients for your business, secure a raise at work, or even score a new job with the right tools.
By the way, paying to learn new skills also helps to stimulate the economy, because when we pay professionals for their expertise, they also can move their businesses forward.
Secure time-saving services
Once time is gone, we can never get it back. So another way to use your stimulus check is to hire help, even temporarily, to get "extra" time in your day. This newfound time can, in turn, free you to pursue passion projects or those that are more lucrative.
For instance, if you hire a virtual assistant — their average base hourly rate is $15.80, according to PayScale.com, though this can increase for assistants with specialized skills — you can free up time to pursue bigger clients, learn a skill that supports your financial goals (remember the previous tip), and more.
This option also can go toward babysitting services, cleaning services, and cooking help (such as meal-kit deliveries). The choice is up to you and depends, in part, on what will offer you the best time-money value.
Hire experts to help improve your finances
You may choose to hire a professional who can help you meet specific financial goals. Maybe this is the year you'll hire a certified tax pro who can advise on planning, deductions, and more, so you can have a better end-of-year outcome. Or consult with a certified financial planner, who can advise on how to best allocate your money, including for things like life insurance and investments. Or hire a communications expert to help with branding or marketing your business. You know your needs best.
Pay for additional wellness expenses
If your existing medical bills are resolved, you may want to consider putting funds toward wellness services that can help improve your quality of life, and, thus, your professional performance.
Perhaps your healthcare provider has recommended acupuncture to help relieve pain, or massage to help reduce stress. Maybe it's time to see a therapist or life coach to help you with goal-setting, mindset, and related activities. Or, this may be the right time to buy home exercise equipment (that you'll actually use), services from a trainer, or similar, since regular exercise can help reduce negative effects of stress and improve your mood.
Whatever you choose, please be kind to yourself. Know that stimulus funds can help get you a little closer to your goals in the coming months. And even smaller purchases can make a difference, if you plan ahead.
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