How to be smart with your stimulus check: Tips and FAQs
In the coming weeks, millions of Americans will receive money from the federal government as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
According to UF/IFAS personal finance experts, now is the time to plan how you’ll use the extra cash.
Michael Gutter, associate dean for UF/IFAS Extension; Jorge Ruiz-Menjivar, assistant professor of family financial management; and Lisa Leslie, family and consumer sciences agent for UF/IFAS Extension Hillsborough County, answer frequently asked questions and offer tips below.
Q: Who can expect a stimulus check?
A: More than 80% of Americans who filed a tax return in 2019 (or 2018) can expect a stimulus check, even if they received a tax refund. Further, Social Security recipients who are not required to file a tax return are also eligible and will not be required to file a return to qualify for this payment.
For additional information on the eligibility criteria for the stimulus and how much you can expect to receive, visit IRS Economic Impact Payment Information Center webpage. Para acceder a la información sobre pagos de impacto económico en español, presione aquí o visite IRS.gov/es.
Q: When will I receive my stimulus check?
A: The Treasury Department and Internal Revenue Service (IRS) have not yet indicated a specific date for distributing or mailing these economic impact payments to eligible taxpayers; however, they estimate that the processing of these checks will begin sometime in April.
Importantly, eligible taxpayers who select direct deposit as their payment option will likely receive this incentive faster than those who choose to receive the money via mail. The Treasury Department will soon launch a web portal where eligible individuals can provide their banking information to receive their payments via direct deposit.
Q: What can I do with the check if I don’t have an account with a financial institution?
A: There are check cashing alternatives for consumers who do not have a checking or savings account with a financial institution. Many local or regional banks, supermarket chains and big box stores will cash your check for a fee that is substantially lower than what you would pay at check cashing stores, which include cash advance, title loans and payday loan stores.
Q: I don’t usually follow a budget. Is now a good time to start?
A: Never a better time. We have a free money management calendar to help you get started. In addition, you can find more information and adaptable resources on how to develop a spending plan in our UF/IFAS Money Matters webpage.
Q: I’ve lost some or all of my income. How should I prioritize my expenses?
A: Think about things you pay for that aren’t necessities. Can you cut back on those or eliminate them?
Prioritize bills that pay for necessities, such as utilities and housing. Not paying bills or paying them late can lower your credit score, making future credit more expensive and more difficult to obtain.
Next, pay down debt. Credit cards are high interest debt. Paying off credit card debt can free more money in your future budget and save money on interest.
Q: I’m falling behind on my bills. What’s the best approach for getting back on track?
A: You may face tough decisions if your income has been greatly reduced or more uncertain than before. Work with your insurance companies, lenders, landlord or service providers about cutting back on the bill.
The Consumer Finance Protection Bureau (CFPB) suggests these strategies for protecting your credit if you’re affected by the pandemic and how to talk to your lenders if you are not able to make payments.
If you’re concerned about making your mortgage or rent payment, visit CFPB website to learn how the CARES act provides mortgage and rent relief.
Q: My income hasn’t changed. What are some smart ways to save or invest this money?
A: If you do not have an emergency fund, this is the time to create one. An emergency fund is money you set aside in a savings account that you can tap when you get hit with an unexpected expense. Visit the CFPB emergency fund guide to learn more about the steps and strategies to build an adequate emergency fund.
If you are in a position to invest your money, make sure your goals area aligned with the right account and the right asset. Investing for the long run tends to involve buying diverse investments and holding on to that portfolio for the planned time frame—this is called the buy and hold strategy.
Q: If my financial situation changes, I want to set myself up to weather the unexpected. What are some things I can be doing now to help ensure that?
A: Create a budget and work now to lower fixed expenses, which are those things you know you’ll always have to pay for on a regular basis. In your emergency fund, set a goal of putting aside enough money to cover those fixed expenses and necessities for several months.