As economic impact payments are distributed throughout the country, many Americans are finally able to make an overdue payment on their mortgage or purchase some much-needed groceries. But for some of you, who engaged in telework practices and continued your regular salary, the payment is more of an extra help than an overdue lifeline.
So at this time, you might be wondering how you can put that payment to best use for the future.
Stash it in savings. If we’ve learned anything from the recent crisis, it’s that too many of us are just a few paychecks away from a financial emergency. Stashing your stimulus money in the bank can help you survive future situations, in the event that you’re less fortunate next time.
Pay down debt. Debt is psychologically stressful, and costs us more money over the long run thanks to interest. Plus, retiring free of debt is a smart idea, especially because that choice can help you keep your living expenses more reasonable. So if your stimulus check ended up feeling more like a windfall, you’ll thank yourself later if you use it to pay down a debt now.
Bump up your retirement savings. Do you meet the maximum allowable contribution to your Thrift Savings Plan each year? If not, stashing some extra funds now can help to shore up your retirement income later. If your agency offers matching contributions, making this move could actually result in double the contribution amount!
Donate to relief efforts. By donating to an IRS-approved charity, you can earn a valuable income tax deduction (assuming you itemize your tax return next year). Better yet, you can help those who have been less fortunate during this time. Just remember to check on the charity’s tax status, and donate only to those that have been screened and approved by the IRS.
If you have any other financial planning questions at this time, we’re here for you. We can set up a virtual consultation and help you plan for your future.