Smart Spending: How To Use Your Stimulus Wisely

Whether you asked for it or not, the stimulus money is on the way. Part of the Democrats' massive $1.9 trillion economic relief package recently signed into law by President Biden is $1,400 stimulus checks going to about 85-percent of Americans. It's not really free money---it's some of your own tax dollars being returned to you. So rather than treat it like welfare or throwaway money, you should put some thought into how best to use it.

"Money Answers Man" Jordan Goodman has several recommendations for those who don't have an immediate need for the money. "Paying down debt is one of the quickest ways to get a return," he says. "If you're owing 14-percent on a credit card and you pay that off, you've got an immediate 14% tax-free return, so that's certainly one thing you can do with it."

Another option is to simply do nothing with the money. "A lot of people are going to save it," says Goodman. "If you don't actually need something, having a rainy day fund is a good idea to put some money away."

"We've had two stimulus checks in the past year, and a large number of people actually did save the money---the savings rate went up dramatically," he continues. "So not everybody is in desperate shape, and needs to spend the money right away to survive."

Rather than just stowing the money away in a bank account or under a mattress, you can also invest it. Goodman recommends finding a solid growth mutual fund. "Putting it in a savings account, you don't really earn anything on it, so you're not going to get much return on that," he says. "But having the money grow for you, I think, would be a good thing over time."

Of course, not everyone is getting a stimulus check. The checks are phased out completely for individuals making over $80,000 per year and couples making over $160,000 per year. But if you are receiving one, make it worth it. "This is a rare chance to get a $1,400 check where you can really think about the best possible use for it," says Goodman. "You can save it, you can pay down debt with it, you can buy something essential...but make the most of this opportunity, because it's not going to happen again."

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