Many people are receiving an economic stimulus check. What are you going to do with your money? Sit down together with your family and prepare a plan. It’s a proven fact that managed money goes further.
For example, you may decide to use 75% of the money for practical purposes and the remaining 25% for enjoyment or to make a special purchase. UT Extension Family and Consumer Sciences offers the following suggestions for managing your stimulus payment and tax refund money:
Pay BillsContinue to pay bills. If you are not able to make a payment, contact the creditor to discuss options. Not making payments or defaulting can affect your credit history and have long-term consequences.
Pay Down Debt
Paying down outstanding balances will save you money on high interest rate debt. Debt can be hard to pay off when only making minimum payments because the majority of the payment goes toward interest. The stimulus payment provides a nice chunk of change to apply toward reducing the amount owed.
Fatten Your IRAEven a modest IRA deposit can have a substantial impact on your retirement account. Increasing any one (or more) of these four components (initial deposit, regular monthly deposit, average interest rate earned, and length of time to retirement) can increase an account balance significantly over time.
Prepare for the HolidaysMake an additional deposit into your Holiday Club savings account or open a new one. Then regularly make additional deposits over the coming months. Whatever you save in this account will go a long way toward avoiding credit card debt during the upcoming holiday season.
Save for EmergenciesOpen an emergency savings account to provide easy access to funds to take care of unexpected events. When the tire goes flat, the car battery needs replacing, or the washing machine goes “ping,” money in an emergency account will let you pay for these expenses without using credit.
How you choose to use your stimulus payment is an individual or family decision. Take the time now to develop a plan that will benefit you financially. There’s nothing wrong with saving some of this money, or paying off debt, or spending some of your payment, or all three. It’s your money, so make the most of it.
For more information on this or other topics, contact Shelly Barnes, family and consumer sciences Extension agent for UT Extension in Wilson County. Barnes may be reached at email@example.com or 615-444-9584.