As the health crisis still looms over the country, you need to make sure you address mistakes with stimulus check use before you use it all up.
The stimulus check is one thing Americans are using to get by through this pandemic. The health crisis affected millions of people closing several businesses along the way. As people were forced to stay indoors for an extended period of time, many workers lost their job. Some were asked to put in fewer hours or even work from home.
Safe to say that these affected a lot of people forcing the government to step in with some help. This is why in the early part of the year, they sent out a $1,200 check to help Americans deal with the crisis. Now, a $600 check is on its way according to Kiplinger which can be a big help especially for those who are currently trying to make ends meet.
That being said, mistakes with stimulus check use can prove disastrous because you could end up with nothing after receiving your check in the mail. You need to be smart with your checks or what the government describes as economic impact payments. Once you receive them, the temptation to misuse them is great.
Here are some of the things you need to keep an eye out for when receiving your check. It helps to know these situations you might find yourself in when using your stimulus check.
Avoid going on a shopping spree
Being cooped up at home for a long time could have taken you out of your routine. One of which is going to shop and purchase things you need, and at times, want. Once you get your check, you might think it is high time you buy something nice for yourself after months of staying at home. You begin to feel that you deserve this and it wouldn’t hurt to use a portion of the money for shopping.
One of the biggest mistakes with stimulus check use is with retail therapy. You believe you will feel better when you get new clothes or a new pair of shoes. Worse, you might even use the money as a downpayment for an expensive gadget you might not use. Not only did you blow through your stimulus check, but you also created additional monthly payments you will not be able to cover for the next few months.
This will either put a lot more stress on your reduced income, it could also put you deeper in the red. You might need a few new things like clothes or even a pair of new shoes. Especially if you are starting to report back to work and your clothes don’t fit you anymore. Just be sure you buy within budget and not splurge all your money on unplanned purchases.
Putting all your stimulus check on debt payment
Mistakes with stimulus check use can happen if you are not careful and not manage the money well. There are also times when well-meaning pieces of financial advice can actually lead to making the wrong decision. Just take debt payment for example. There is a good chance that you are either behind or struggling to meet all your financial obligations because of the pandemic.
If you are not able to report to work, your income will be severely impacted. This could lead to a tough time paying down debt. When your stimulus check comes in, it can be pretty tempting to just put everything towards your debt obligations. This can give you peace of mind knowing that you are up to date with your payments.
But what will happen next billing cycle? Remember that because of the pandemic, there are lenders who took the initiative of helping their customers with repayment programs to stay current. You can also look at debt consolidation to help you with low monthly payments. There are other ways to deal with debt payment. It does not mean that you shouldn’t pay but explore repayment options so you can hold on to your check for emergency situations.
Haphazard investment
If you belong to the few who might not be as affected by the pandemic as others, you might think that mistakes with stimulus check use are of no concern to you. You are probably thinking of using the money and investing it for future use. This is a good idea if you do not have any immediate need for the funds. But you need to be smart with this decision as well.
Just because you have no need for the check at the moment, it does not mean you can invest in whatever comes to mind first. You still want to make sure that the investments you have can give you the funds you need in the future. Regardless if it is for your retirement, a college fund for your children, or even a business you want to set up in the future. Invest wisely to make the most of the money you have now.
Not thinking ahead
One of the most tragic mistakes with stimulus check use people do is thinking that the pandemic is already over. That or they will not have any need for emergency money in the future. If there is one thing this health crisis should have taught people, it is the importance of saving emergency money for unforeseen challenges in the future.
The stimulus check is a much needed shot in the arm for a lot of people who lost their jobs. But as the economy slowly adjusts and picks back-up, you need to plan ahead as well. If you do not have any reserve funds, now is an excellent time to start having one. Start with a small amount and develop that habit of saving money for a rainy day.
Buying things you do not need
One of the items that ran out in the early months of the health crisis was toilet paper. People wanted to buy as many as they can as stay-at-home orders were handed down by different states. You might have seen images of empty shelves and shopping carts filled to the top as they line up at the checkout counter in the store.
Being social creatures, we take our cue from people around us. When others begin to buy more than what they need, we are compelled to do the same and convince ourselves that we are just preparing. Keep in mind that you can prepare without panicking. Or in this case, hoarding more toilet paper than you need.
If you do need to use part of your stimulus check stock-up on items around the house, focus on essentials. It can be non-perishable food for you and your family. Do not forget about the medications you need. Cleaning supplies to help clean and disinfect your house will help as well to fight off the virus going around.
How to improve your finances during a health crisis
Now that you have an idea about some of the mistakes people make when it comes to using their stimulus check, it is now time to strengthen your finances. Here are a few ideas you can consider to help you do just that.
Stay healthy
It makes a lot of sense to try and keep fit and healthy in the face of a health crisis. For one, it can help give you a better chance of staying healthy. You give your body that much-needed boost and increase the strength of your immune system to fight off the virus. The healthier you are, the safer you will be. It also gives you more energy to help you focus on your finances. Forbes also shares that investing in yourself is a great long-term move.
Revise your budget down
As the health crisis affects your finances, you need to make sure that you adjust your budget accordingly. If you do not have a household budget, this is the perfect time to create one. Take a look at your budget and find areas in your expenses you can cut down on. It can be food take-out where you can cook your own meals at home. If your transportation cost is too much, why not discuss the possibility of working from home? Be creative and find ways to cut down your expenses.
Start exploring other income opportunities
Do you have a hobby you can turn into an income-positive venture? You might have a lot of items you are no longer using at home you can sell online. Do you have time to explore running an online shop from the comfort of your own home? Exploring alternatives with your income source could be a big help when your main source of income is impacted.
People make mistakes with stimulus check use which negates the value this money could bring during the health crisis. You need to use the money wisely to help you get through the crisis.
