best ways to spend your stimulus check
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Best Ways to Spend Your Stimulus Check

Luckily for Americans another stimulus check is finally on its way. Here we discuss all of the best ways to spend your stimulus check.

Fortunately for millions of Americans another round of stimulus checks are on the way.  Before you get the direct deposit or check you should have a plan of what to do with these funds.  Below we detail the best way to spend your stimulus check.

What are the best ways to spend your stimulus check?

Now that you have an idea of just how much you will receive for the second round of stimulus checks, you need to plan what to do with the funds. Below we detail the best ways to spend your stimulus check.

Pay Down Debt

The last year has certainly been tough on all of us. As the number of COVID-19 cases increased, so did unemployment.  Unemployment has soared due to COVID related state wide lock downs, furloughs, and lay-offs. Although the CARES Act did include increased unemployment benefits, rent moratoriums, and mortgage forbearances, for some this just wasn’t enough.

Many have relied on pay-day loans, high interest credit cards, as well as short term loans from their bank or credit union. If you fall under this category, it might be in your best interest to evaluate all of your outstanding balances and use your stimulus check to pay down existing debt.

Thanks to interest the total balance of your loans are only going to increase. This is why one of the best ways to spend your stimulus check is on outstanding debt.

If you are a recent college graduate that has outstanding student loans, you may want to reconsider using your stimulus check to pay back your student loans.  If you have federally owned student loans there is a good chance you can defer your student loan payments for six months. Plus, all interest on federally owned student loans has been waived for the time being.

A great tool to help you paying down debt is a debt snowball spreadsheet. The debt snowball spreadsheet is easy to understand. It breaks down debts into a simple payment plan.

Emergency Fund

An emergency fund is a sum of money you have stashed away for emergencies only. A strong emergency fund should be able to cover 3 to 6 months’ worth of expenses.  These funds can be used to cover unexpected medical bills, rent/mortgage payments, and anything else that you may have to pay.  Emergency funds are imperative to your financial health in case of a furlough or a lay off.

According to Vanguard, 56% of people in the United States don’t have an emergency fund that would cover 3 months of expenses. If you have an emergency fund, chances are you may have had to tap into it during the COVID pandemic. If you do not have an emergency fund, now is the perfect time to start one.

Avoid keeping your emergency fund in cash under your mattress or somewhere else of the sort. Instead, put your funds in a high yield savings or checking account, or even a money market account.  Shop around to find the best type of account that offers minimum fees and the best yield.

Depending on the amount of money in your emergency fund and the account you decide to use, you can expect anywhere from between 0.35% APY to 0.80% APY.  Although this may not seem like much over time it will add up.

Adding to or starting an emergency fund is one of the best ways to spend your stimulus check. Considering the uncertainty over the next couple of months, you never know when you will need to use it.

Personal Expenses

Considering many families have been in a cash crunch throughout the COVID-19 pandemic, some personal expenses may have been put on the back burner. Now may be a good time to use this extra cash to put towards those expenses that you put off due to the pandemic.

If you were laid off or furloughed or were able to work remotely during these crazy times, you may not have put a lot of miles on your car. That isn’t a good excuse to not keep up on maintenance costs.

It is probably safe to say that your expensive household appliances like your stove, dishwasher, or washing machine or drier have seen increased usage since March. Maybe now is a good time to look into replacing them.

Spending your hard earned money on these types of expenses is never fun.  This is why using your economic impact payment on personal expenses is one of the best ways to spend your stimulus check.


If you are in a strong financial position and have your debt under control as well as a healthy emergency fund, you may want to consider investing your second stimulus check.

Because investing does come with some amount of risk, there is a chance that the value of your investment could decline. That being said, I recommend using a service that invests the funds for you in a portfolio based on your investment objective and risk tolerance.

Try to avoid opening up a brokerage account and selecting individual stocks unless you really know what you are doing.  Instead, open up an account with a financial services like Acorns. Some firms including Acorns will even give you free money once you open and fund your account.

Luckily, Acorns has very low minimums to open an account, and charges very reasonable prices – just $1 a month!  If you are new to investing or previously thought you didn’t have enough money to invest, now is a great time to start.

To put things into perspective you could have realized a 15% – 20% increase in the market value of your portfolio if you invested your first stimulus check when you received it.

Investing is one of the best ways to spend your stimulus check.  Before you decide to open up an investment account like Acorns, you should make sure your debts are paid off and you have a strong emergency fund first. You could also use your investment account as an emergency fund and take advantage of higher possible returns over a normal account like a savings account.  But remember, the value of your portfolio can decline.

Best Ways to Spend Your Stimulus Check – Summary

Hopefully over the course of the next several months life gets back to pre-COVID levels of normal. In the meantime, be sure to take advantage of your second stimulus check either by paying down debt, putting it in an emergency fund, using it for personal expenses, or investing it.

We hope that this article detailing the best ways to spend your stimulus check was useful. For more articles on financial planning, be sure to check out this section of our site.

Questions or comments? Be sure to leave them below.

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