Five Smart Ways to Use Your COVID-19 Stimulus Money


In March, President Trump approved a stimulus package to provide economic support for families caught up in the COVID-19 financial fallout. The plan puts an additional $1,200 in millions of Americans’ pockets, with an additional $500 offered for each child in a family. 

Eligibility for the package depends upon a family’s adjusted gross income as reported on the most recently filed tax return:

  • Individuals who reported $75,000 or less will receive $1,200. 
  • Married couples who filed jointly and who collectively earn $150,000 or less will receive $2,400.

Not everyone will be afforded the full package, but those who are can face a substantial windfall. This money can be a welcome relief for families struggling to pay the bills or manage debt. However, it can also provide a golden opportunity to clean up your finances.

Here are a few smart ways to put that extra cash to use.

Start – or bolster – your emergency fund

If the COVID-19 pandemic has taught us anything, it’s that life – and the economy – is unpredictable. In many ways, a well-stocked emergency fund can mean the difference between economic survival and financial ruin.

Many financial experts recommend padding a separate savings account with three-to-six months of living expenses in the event of a disaster, much like the COVID-19 pandemic. Others suggest saving more – enough to fund your family for six months to a year.

However, some money is better than none, so now is a good time to start a saving habit. Start by depositing your stimulus check directly into a savings account, and forbid yourself from touching it. If you lose your job or face another financial hardship (whether related to COVID-19 or not), you will have some interest-earning cash available to cover your most pressing bills.

If your employment situation is relatively stable, consider setting a recurring transfer to your account so your savings can grow over time. The key is to set it and forget it: once your fund is set, establish a rule that you are not permitted to withdraw from it unless and until a true emergency arises. Examples of true emergencies are medical crises, damage to your home or property, an unexpected car breakdown that necessitates purchasing a new one, or a job loss that leaves you with no income to pay your bills. Examples of things that are not true emergencies: a sale at your favorite store, a non-essential home renovation project, a vacation, and purchasing items you don’t need so that you can “keep up” with your friends or neighbors.

Bulk up on essentials

Forced quarantine and shelter-in-place orders are limiting our trips out. Not to mention, many pandemic experts believe that this cycle may repeat itself. As such, it’s more important than ever to keep a robust supply of essential items for your family, from canned goods to paper products.

Consider using a portion of your stimulus money to bulk up on your supply of nonperishable food items, cleaning supplies, paper products, medications, personal hygiene items, and other supplies to carry you through the remainder of your state’s shelter-in-place period – and, if needed, another quarantine later this year.

Pay down debt

Hopefully, if you are in debt, you’ve already been working through a debt relief program or at least explored some of the best debt consolidation options available to your family. Regardless of your situation, your stimulus money is like bonus cash that you can – and should – consider using to make a dent in your payments.

Decide which debt to attack first, starting with the amount with the highest interest rate (this will likely be a credit card balance). Eroding your monthly bills can save you substantial amounts of stress amid an already anxiety-provoking time, and can help you emerge from the pandemic in a stronger financial position.

If you choose to reserve some of your stimulus money, consider depositing the rest into your emergency fund, tackling mounting debt, getting caught up on your bills, or funding an IRA.


If your emergency fund is stocked, you have the supplies you need, and you’ve been effectively managing your debt, consider investing your stimulus cash so that it can grow with the market. Consider purchasing stocks or index funds (they are cheaper, now, given the economic downturn), or invest the money in a traditional brokerage account or IRA.

Depending upon your income level, you can consider opening a Roth IRA or a Traditional IRA. If you don’t yet have one, it is fairly simple to set one up online through companies like Vanguard or Fidelity.

Support local businesses

Individuals and families are not the only ones facing financial hardship right now: with forced closures, reduced hours, and staff layoffs, small businesses are struggling, too.

Consider spending some of your money on patronizing local businesses or service providers, whether ordering a meal from a family-owned restaurant or hiring a contractor to work on a home project for you. The injection of some funds – no matter how small – into the economy can make a tremendous difference on a global scale.

However, don’t take this as carte blanche to treat yourself to a spending spree! Make your purchases thoughtfully and above all, prioritize saving, paying down debt, and padding your family’s emergency fund so that you can emerge from the pandemic in as strong a financial position as possible – thus positioning you to support and patronize many other businesses in the future!

Maintaining sure financial footing

Unfortunately, the need for stimulus money also means that our world – and our global economy – are in poor shape. However, by making a few smart, disciplined choices, you can use your cash windfall to make good use of the situation. With luck, your bonus cash will provide some financial relief should you face a layoff or other financial crisis.