Man with stacks of money holding it up to his head.
When that stimulus check hits! via Tenor

Top 5 Ways to Spend Your Stimulus Check

by Manny Ikomi

April 6, 2021
3 min read


  • How To
  • Cash Flow

The COVID-19 pandemic has created serious financial challenges for many of us in the U.S.. So far there have been 3 COVID relief bills aimed at providing financial assistance including direct cash payments we call stimulus checks. Getting essentially free money from the government is a huge opportunity and it's up to us to use it wisely!

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  1. Take care of your basic living necessities.
  2. Make minimum payments on your bills and debt.
  3. Fill up your emergency fund.
  4. Pay off high-interest debt.
  5. Invest in your retirement account or brokerage.

1 Take care of your basic living necessities.

If your having food or housing insecurity this is the primary purpose of your stimmy in addition to unemployment insurance:

  • Rent/Housing
  • Food and groceries
  • Utilities and internet

If you're still having trouble covering these basic necessities contact your landlord, mortgage company, or utility providers and see if they're offering COVID related relief or payment plans.

2 Make minimum payments on your bills and debt.

If your basic necessities are covered remember to catch up and pay any past due bills and debt payments.

  • Credit card fees and interest payments
  • Car payments
  • Private student loan payments
  • etc…

Federal student loan payments have been deferred through September 30th, 2021 with 0% interest. Keep in mind this COVID relief aid does not apply to private student loans, although some may offer forebearance. Since federal student loan payments are paused at this time it's best to focus on keeping your private student loans current.

3 Fill up your emergency fund.

Given everything that's happened since the start of the COVID pandemic all of us should be seriously evaluating our emergency funds (or lack thereof). If you don't currently have an emergency fund your stimulus check is your chance to start one!

If you're not sure why you need an emergency fund or how much you should put in one check out our linked posts!

If you feel your income is getting shaky or you had to use some of your emergency fund previously remember to re-fund it. It will always be better for your emergency fund to be too much than too little!

4 Pay off any high-interest debt.

If you have a healthy emergency fund with a stable income the next best thing is to pay off high-interest loans and credit card debt.

  • Credit Cards
  • Student Loans
  • Auto Loans
  • etc…

High-interest in this case refers to anything above 9%. Almost all credit cards and some private loans fit into this category. Paying off debt is one of the safest ways to build wealth, financial stability and security.

Alternatively, if the only debt you have is paused federal student loans you could apply your stimmy to that and pay it off even faster! Since interest is at 0% until September 30th 2021 all payments are being applied toward the principal balance which will reduce the total cost of the loan when payments resume.

Bonus Tip: Refinance your loans!

The pandemic has caused interest rates to drop significantly this past year, now is a great time to refinance your loans if you're able to do so. Reducing the interest rate on student loans and mortgages especially could save you thousands in interest!

5 Invest in your retirement account or brokerage.

Investing your stimmy in a tax-advantaged retirement account will give you the best bang for your buck! If you haven't been able to make retirement account contributions this is your chance.

If you don't have a tax-advantaged retirement account like a Roth IRA or 401k the best time to start was yesterday. Although I personally believe retirement won't really exist the way we know it in the future, they are still great places to grow your money with special tax privileges.

Haven't recieved your stimulus payment yet?

The IRS created a tool to check on the status of all stimulus payments.

Got it all covered? Donate to those in need!

If you received a stimulus payment and you don't need it to do any of the above I encourage you to give it away or donate part of it. You don't even need to search for an official charitable cause, think of a friend or family member who may be struggling or treat an essential worker you know. Keep in mind marginalized groups like recent immigrants, who are disproportionately affected by the COVID pandemic may not qualify for stimulus payments.

Feel free to mix and match!

I put these tips in a specific order to help ya'll prioritize, but they are certainly not mutually exclusive. Feel free to mix and match these tips to maximize the value you get out of your stimulus check. Personal finance is personal, it's up to you to assess your own situation and decide whats best for you!

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nuOpulence © 2021
by Manny Ikomi