The $1.9 trillion relief bill, known as the American Rescue Plan, has been signed into law by President Joe Biden. Highlights of the bill include extended unemployment benefits, direct checks to individuals and more.
Just like the two other COVID-19 relief bills passed during the pandemic, this version also features direct payments to Americans. This time around, eligible recipients can expect $1,400 per person ($2,800 for couples), including adult dependents—a family of four could receive up to $5,600.
However, payment parameters are stricter this time around than with the previous direct payment. The full amount will go to individuals earning under $75,000 (or $150,000 for couples), with payments cut off entirely for individuals earning over $80,000 (or $160,000 for couples). Individuals earning an amount between those figures will receive a reduced sum.
If you are one of the millions of Americans who are receiving the $1,400 per person Economic Impact Payment in your bank account, it can be tempting to treat that money as a bonus, but it’s important to use it wisely to avoid financial problems down the road. We’ve assembled some tips on how to spend your stimulus money.
“Remember the purpose of these funds is to provide financial assistance if you are impacted from COVID-19 in any fashion,” said David Murphy, VP of Finance & Risk at Marshfield Medical Center Credit Union. “These funds are most useful if they’re spent on added expenses due to the pandemic.”
Here are some tips for prioritizing your funds:
- Buy essentials – This money from the government is designed to help afford cost of living expenses like groceries and bills.
- Pay your rent or mortgage – Though many states have frozen rent or mortgage payments, those expenses are not just disappearing. Continue to pay your housing expenses as you are able.
- Start or contribute to a rainy day fund – The importance of having an emergency fund has become more evident than ever before. Put some of the stimulus money towards your rainy day fund. (Check out the Saver’s Sweepstakes program at MMCCU!)
- Pay down debt – Debt accrues interest, so the faster you can pay it down, the less you will pay over time.
- Set aside money for your children’s futures – Consider using the $500 to invest in your child’s future by starting a college fund.
- Donate, if you are able – Nonprofits are struggling, too. If you have the means, consider giving back to a local charity or supporting a small business in your community.
“While you may not need the funds today, will they be needed in the future?” added Murphy. “Spending the funds today frivolously may leave you vulnerable in the future.”
As always, if you have any questions, contact your friendly MMCCU team at 715-387-8686 or mmccu@mmccu.com.