President Joe Biden finally got it done. The long awaited $1,400.00 stimulus package has started trickling into bank accounts and mailboxes across the country and many Americans are incredibly happy. The pandemic emergency relief package has earned Joe Biden many new monikers, though none quite as catchy as “Moneybagg Joe”, a play off of the wildly popular Memphis-bred trap rapper Moneybagg Yo. The American Rescue plan overcame significant odds on the path to becoming official in early March 2021. Several conservative Republican lawmakers and senators opposed the stimulus package suggesting it would be hard to get the 60 votes needed to pass in the Senate. After the smoke cleared, Democrats came out victorious in attempting to put an extra $1,400 in many Americans pockets – and many of our millennial friends are already planning their next trip to the Gucci store. Nonetheless, Balance Bookkeeping is here to encourage a smarter approach to making that stimulus check work for you.
1. COVER YOUR URGENT NEEDS
First and foremost, make sure your most important needs are met. Childcare expenses, food, gas, transportation, rent, or mortgage payments are nonnegotiable. First, take a trip to the grocery store to purchase some healthy foods and plenty of water. This will help save money by reducing the dollars you would otherwise spend eating out at your favorite restaurants.
While prioritizing these things, be sure to check in with your leasing office or landlord – many states and counties are offering rent relief due to the pandemic. See which programs you can take advantage of, then allocate your newfound resources accordingly. President Joe Biden just recently extended the eviction moratorium until March 31st. This information could be useful to some of us, as the economic impact of the COVID-19 pandemic has been disastrous for many neighborhoods that we are familiar with.
2. PUT 10% AWAY FOR A RAINY DAY
The first thing you should do with your stimulus check is to save ten percent. How does this work? Take $1,400 and divide it by ten ($1400/10=$140). This is how much you should put in your savings account for a rainy day. All our true fans know that Balance Bookkeeping always advocates for putting back 10% of every dollar you touch, until you can build up at least 3-4 months of discretionary income for a rainy day. You never know what could happen – a nail gets in your new run-flat tire, you may lose your job due to layoffs, etc. Putting back $140 of your stimulus leaves you with $1,260 left over to spend guilt-free. This 10% rule will not set you up for retirement, but it will keep you from falling off of your financial and personal goals.
3. PAY DOWN SOME OF YOUR CREDIT CARD DEBT AND LOANS
One strong avenue to allocate some of the $1,400 stimulus is toward reducing your debt. $1,400 would put a significant dent in paying down a payday loan or credit card balance. The longer your balance is carried by the credit card companies, the more interest builds up that you will have to eventually pay for. The less interest you pay to the credit card companies, the more money you get to keep in your pocket.
Credit is an immensely powerful tool, but it can get messy if you don’t do your research on how to manage it properly. A good rule of thumb is to keep your credit card usage below 10% each month. Your credit card usage is the amount of money that you spend on your credit cards each month – this is how creditors determine your credit card limits, etc.
4. INVEST A PORTION OF YOUR STIMULUS
$1,400 can go a long way if you know how to spend it correctly; this includes investing some of this money into stocks, bonds, real estate, and entrepreneurial pursuits. Start that side business that you have always been thinking about – come up with a catchy name and check sites like GoDaddy and make sure your domain name is available. Go ahead and pay for the domain name and visit your nearest city courthouse to register your new company’s DBA and/or LLC with your stimulus money. This will be a great way to make the most out of your “stimmy”. The millennials of the 21st century are amid numerous opportunities to build wealth via the internet and many other means. If you are between the ages of 15-32, don’t let this incredible time pass you by and have nothing to show for it. Millionaires are born every day in America, with over 80% of millionaires being first-generation.
5. BUY YOURSELF A NEW SUIT
The world is slowly opening back up. This means that the economy is picking up steam – new jobs, new opportunities, and new businesses are popping up everywhere. Make sure you’re ready to get back out of the house with a purpose, by purchasing new business attire. A nicely tailored suit and/or classy business attire tells people that you are an upstanding person who is trustworthy and takes life seriously. Take the time to do some research on the many benefits of a suit and nice business attire brings, along with an improved sense of self-esteem.
THE BIG PICTURE
If you don’t necessarily need the extra $1,400, we would strongly recommend you save it and relax. Wealth management experts are forecasting “stellar” economic growth in 2021, which is great news for investors. The economy is set for a rebound after the COVID-19 pandemic, with e-commerce continuing growing. Caution is always better than frantic spending, no matter the circumstance.
Important: For those who are wondering where your stimulus is, follow this link to get more information: Get My Payment.Tweet
ABOUT THE AUTHOR
Eric Anderson is an Accountant and MBA holder based in Houston. His background includes over 5 years as an accountant, writer, social media marketer, and business professional.