The best ways to use a stimulus check

Myelle Lansat


Myelle Lansat

Myelle Lansat

News Editor

Myelle Lansat is a news editor at Policygenius, where she writes the Easy Money newsletter and covers insurance and personal finance. Previously, she was a personal finance writer at CNBC and Acorns, and a reporter for Business Insider.

Updated|2 min read

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President Biden signed the $1.9 trillion American Rescue Plan in March. This is the third coronavirus aid package since the start of the pandemic and includes the largest stimulus payment.  

The plan includes $1,400 stimulus checks if you earned up to $75,000 individually or $150,000 as a couple. 

This may not be enough to cover major expenses, like your mortgage, but it can help pay off late bills, rebuild an emergency fund or pad your retirement account.

“There are people who have experienced a loss of income and if they need this money to catch up on expenses, there’s nothing wrong with that,” said Marguerita Cheng, certified financial planner and CEO of Blue Ocean Global Wealth.

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If you’re getting a stimulus check or other windfall, here’s how to make the most of it.

Catch up on bills

Focus on unpaid bills that can have a lasting impact on your credit like cable, phone, utilities or credit card debt, said Cheng.

“If you have an extra windfall, don’t go back and pay larger bills like student loans. Catch up on essentials like utility bills,” she said.

For bigger payments, like student loans or mortgages, Cheng recommends calling your lender and explaining your financial situation. Your lender may be more understanding because of the pandemic and work with you on delaying payments, she said.

Pad your emergency & retirement funds

If you dipped into your emergency fund this year, the stimulus check can be a good way to replenish it, said Jen Grant, a certified financial planner and financial adviser at Perryman Financial Advisory in Dallas. Experts recommend three to six months worth of funds, but if the pandemic has shown us anything, it’s that having a year's worth of emergency cash may be better.

If you have enough in an emergency fund and your bills are squared away, you can bolster your retirement account, said Grant.

“You can use this to bump up your 401(k) a percent or two,” she said. If you don’t have a company sponsored 401(k), open an individual retirement account traditional or Roth IRA to let your money grow tax free.

Buy something you need

Don’t use this money to buy something that could put you in debt, like a down payment on a home or car, said Grant.

Rather, get something that will add value to your life with every use, like kitchen utensils or gym equipment, said Cheng.

“It’s OK to splurge but make sure you’re not impulsive. Buy something that you need to stay sane and healthy,” she said. “Just make sure it’s something you’ve had your eye on for a while.”

Image: Nastia Kobzarenko

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