How to Maximize Your Economic Impact Payment
Millions of Americans are receiving the $1,200 per person, $500 per dependent Economic Impact Payment in their bank accounts. 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.
“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 lockdowns, like covering daycare, or as a stopgap for a loss of income from your employer shutting down.”
Here are some tips for prioritizing your EIP 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 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.
- 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.
“As of today, the Governor has extended the lockdown for an additional month, and we ultimately do not know how long this lockdown will last,” added Murphy. “While you may not need the funds today, will they be needed in the future? Spending the funds today frivolously may leave you vulnerable in the future.”