As a result of the COVID-19 pandemic, many have found themselves out of work, resulting in significant financial stress. To help Americans bridge the gap through this pandemic and cope with their loss of income, a federal relief package was passed to provide financial relief during this time. Depending on your income level, you could receive up to $1,200; if you’re married or have kids, you could receive more.1
As checks begin to mail and deposit directly into accounts, you may be unsure of how to best utilize the money. Consider these points before you receive your stimulus money to have a plan in place.
- If you’re unemployed, you may want to use the money to help pay for living essentials, such as food and rent/mortgage payments. Review your budget to see if there’s room to eliminate unnecessary expenses, so you’ll have more flexibility in your budget to cover these essentials. Federal unemployment insurance will cover up to four months of your salary during this time.2 If you haven’t applied for unemployment already, be sure to do so. And if you determine you don’t need your stimulus money for living expenses, don’t be tempted to spend it; it may be best to save it.
- If you’re employed, but your emergency savings needs help, this is your chance to build up your savings. The full impact of the pandemic is uncertain, so you can set this money aside to help cover living expenses should the need arise. It’s recommended to have approximately six months of expenses in your savings to cover things such as rent/mortgage and food.3 You may also want to consider putting the stimulus money in a high-yield savings account to earn interest on top of these funds.
- If you’re employed and you’re comfortable with the amount you have in savings, you may consider supporting local businesses. Shop local to support your community or donate to your favorite charity – be mindful of scams during this time and only use trusted websites.
- If you have loans, but can’t make your monthly payments, consider deferment opportunities. To give college graduates some peace of mind, payments on student loans can now be deferred through September 30, 2020 under the CARES Act.4 And if you have other debts, such as a mortgage, car loan, or credit card payments, many lenders and financial institutions are providing hardship and relief programs. It’s best to contact your institution to see what options are available.
- If the stimulus money doesn’t cover all your expenses, there are options. For many Americans, the stimulus money and relief options won’t be enough to cover all living expenses. Should you need additional support, you may consider a financial hardship loan to bridge the gap. If you determine a loan is necessary, be strategic with the funds and use them wisely.
Many are facing difficult times due to the pandemic. The best thing you can do is make thoughtful decisions after assessing your situation and needs to ensure your stimulus money is put to good use. We care about our members and our communities and are here to help. Visit our COVID-19 Response page for more information on how we can support you.