14 Jan 3 Ways to Use Stimulus Money and Not Blow It
Looking for ways to use stimulus money?
One thing is for sure – you don’t want to blow it…you want to grow it!
Don’t make the same mistake most lottery winners do when they receive a big check and spend the money frivolously.
Instead, look at the stimulus money as a way to protect your future and yourself.
At this point, some people have already received their $600 in stimulus money, and others are still waiting for it to arrive.
Note: Per the relief legislation, the IRS has a deadline of January 15, 2021, to issue the $600 stimulus payments. Those who have not been issued their money during this next round will need to file a 2020 federal income tax return and wait for the IRS to send their relief money in 2021.
Additionally, with the administration change coming soon, there is a big possibility you may receive even more stimulus.
[Watch our video Second Stimulus Checks for $2,000 to learn more.]
According to Kiplinger, “A third round of stimulus checks almost seems like a done deal now that the Democrats will soon control the House, the Senate, and the presidency.”
While there is reason to believe Americans will receive a $2,000 stimulus, it will only happen quickly if Congress passes a stand-alone bill.
Kiplinger explains, “With a stand-alone bill, that could happen relatively quickly – perhaps within a week. The IRS could then start sending out new payments in a matter of days (as they did with the second round of stimulus checks). That would potentially put third-round stimulus money in peoples’ pockets in early February.”
With that being said, no matter how much money lands in your bank account or when, there are wiser ways to use stimulus money than blowing it on electronics or upgrading your home.
If you haven’t spent your $600 stimulus or are still waiting for it to arrive, read on for 3 wise ways to use stimulus money to grow your wealth.
#1 Invest Stimulus in Retirement Savings
One of the best ways to use stimulus money is to put it in your IRA or 401(k), which allows the money to grow over time.
Take your stimulus money and open an IRA (Individual Retirement Account). The 2021 contribution limit for IRAs is $6,000. Those 50 and older can contribute an additional $1,000.
Remember, with an IRA, you can contribute the maximum for 2020 until April 15, 2021. So, if you have an IRA, plan now to maximize the contribution limit for 2020 before this April.
Another option is to use the stimulus money to contribute as close to the maximum amount allowed in your 401(k).
401(k) contribution limits for 2021 will stay the same as 2020 – at $19,500. This applies to 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan.
For those age 50 and older, the 401(k) catch-up contribution is $6,500.
#2 Invest Your Stimulus Money in the Market
Another wise way to use stimulus money is to invest the money in high-dividend stocks so you earn passive income.
As a shareholder in a company with high-dividend stocks, you get paid regularly — simply for owning the stock.
If you have hesitated to trade stocks, now is the time.
With tools like Webull, it is easier than ever before for beginners to start investing in companies like Tesla.
Webull is a stock trading mobile app that is user-friendly, making it easy to make wise trading decisions.
Watch This Video and Learn How to Set Up Your Account and Earn 4 FREE Stocks
#3 Save Your Stimulus Money
2020 taught us how quickly life can change.
Sadly, many Americans found themselves struggling financially when they lost their jobs or had pay cuts, while others dealt with hefty hospital bills.
2020 is the perfect example of why it is critical to have an emergency fund.
According to a recent Bankrate survey, “As the pandemic enters its most intensive phase yet and job growth stalls, just 39 percent of Americans surveyed say they could comfortably cover an unexpected expense of $1,000.”
This means only 4 out of 10 Americans have an emergency fund.
So what better way to use stimulus money than to put it into your emergency savings. And don’t touch it.
If we have another 2020 black swan event, your emergency savings account will be how you make ends meet.