The Senate has approved a trillion stimulus package that will send all Americans earning $75,000 or less a $1,200 check within a matter of weeks. The House is expected to vote on the bill by the end of the week, but its 96-0 Senate vote suggests it should have no partisan hangups.
In addition to $250 billion in direct payments, the bill will provide $350 billion in funding for small business loans, $250 billion in unemployment insurance and $500 billion in loans for distressed companies.
With the first $1,200 check potentially coming within the next month, American adults will need to decide how best to utilize the funds. Here are 10 of the best ideas for your $1,200 check.
1. Pay Your Bills
The intent of the checks is partly to stimulate the economy, but partly to ensure that out-of-work Americans can make ends meet. The first thing Americans should do with their $1,200 is make sure all their bills are covered for the current month and for the following month. Make sure mortgage/rent payments, groceries, gasoline, and utilities are all taken care of.
2. Pay Down Debt
The entire economy may be shut down, but banks and credit card companies are definitely not shutting down the interest charges on your debt. If your basic necessities are all covered for the next two months and you have extra money left over from your $1,200 check, pay down debt, starting with debt with the highest interest rate (likely credit cards) first.
3. Start/Build An Emergency Fund
If you are among the Americans that are lucky enough to continue getting paid and/or are financially prepared to weather the near-term coronavirus headwinds, consider using your $1,200 check to start or add to an emergency fund. Maybe your financial situation is stable for now, but job losses or medical expenses can pop up without notice.
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4. Meet Your Employer’s Retirement Matching Limit
If your financial situation is stable and your employer offers retirement account matching, make sure you are maxing out that matching. Many employers will match a percentage of your annual retirement contributions up to a certain limit.
5. Invest In Stocks
It may seem crazy to buy stocks in the current environment, but long-term investors during the 2008 and 2009 financial crisis made a killing over the next decade. Consider buying diversified index funds, such as the SPDR S&P 500 ETF Trust (NYSE: SPY) and take advantage of the long-term gains of the S&P 500 index.
6. Save For College
If you’re near-term financial outlook is solid, consider opening or contributing to a 529 Plan for your child. These plans will allow your $1,200 to grow on a tax-deferred basis, and distributions for qualifying college-related expenses are completely tax-free.
7. Learn A Skill
If you have extra time on your hands, consider enrolling in an online course to learn a skill that will improve your resume in the future. Learning basic computer coding or a second language could help boost your earnings potential when the economy gets back to normal.
8. Improve Your Health
Investing in a personal trainer or an at-home workout and/or diet is a great way to improve your mental and physical health and reduce the stress of the current situation. In addition, this investment could pay for itself if it keeps you out of the doctor’s office or hospital at some point in the future.
9. Teach Your Kids/Family To Invest
It’s never too early to teach a teenager, young adult or spouse the basics of investing. If you are already well-versed in investing, using the $1,200 to open up a trading account for a loved one and showing them the Wall Street ropes is a relatively low-risk way of letting them get their feet wet in the market with real money.
10. Invest In Home Improvements
By spending the $1,200 in a smart way, you can help stimulate the economy and potentially get a return on your investment by improving the value of your home. HGTV says small improvements such as replacing old faucets, lighting, doors and electrical outlets are simple ways to improve your home’s value without breaking the bank.
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