How to Spend Your Stimulus Money

What should you do with your stimulus money? As you’re deciding what to do with your own windfall, we have a little framework to help guide your way.

1. Don’t “Use” the Money Before You Get It

Yes, it’s downright tempting to justify the impulse spending now because you know you’re getting this check soon. But, if you don't have the money yet, save yourself the stress of anticipation by only giving those dollars jobs when they hit your bank account.

2. Ask: What Does This Money Need to Do Right Now?

It might be glaringly obvious what this money needs to do right now. We all remember the unsettled chaos and franticness when the pandemic first hit in force. Although the heartache and gloom of this pandemic continue to hang heavy, we can make this decision from a calmer place than the unhinged jitteriness of the spring.

When you’re asking this question of “what does my money need to do right now,” does it sound like the sped-up, high-pitched voice of Alvin the chipmunk or the calm, steady pitch of Morgan Freeman?

Sure, everything still feels unresolved right now (Waffle House—you were our strong and steady!), but you don’t need to operate in a state of chaos or urgency. Just take a few minutes, find some calm, and gut check (and budget check) what you need this money to do right now.

1. Are your essentials covered (food, shelter, utilities)?
2. Are your loan payments covered (private student loans, car loans, credit card payments)?
3. If you’re in a state of hardship, have you called your providers to reduce these costs?
4. Could you budget for essentials further out in the future? 
5. Could you fatten your cushion (emergency fund, future car repair, future pet expense)?

Look at this list through the lens of your budget and everything is crystal-clear in terms of priority and timing. Armed with the full picture, maybe you spend $50 less on groceries this week because you know you have a bill coming due in five days.

Since starting a budget, 98% of respondents said they felt more in control of their money and financial future.

3. Ask: What Will Boost My Financial Immune System the Most?

If you’re broke (or close to it):

We realize those reading this are in every financial situation possible: you might have a razor-thin cushion and this money will put food on the table. This money will keep the lights on. You’re just trying to keep your head above water and you know exactly what will help your situation the most. Budget for those essentials like food, housing, and utilities first and foremost.

Read: 6 Steps to Make Your Money Go Further

If you’ve got a bit of a cushion:

For those with a bit more of a cushion but you still feel a little financially shaky, the decision isn’t quite as clear cut. Sometimes, your best move may be to save that money rather than spend it. Build up your true expenses, fatten your emergency fund, or save for the car repair that you don’t see coming yet. 

You may be thinking, “Well, it’s better for the economy if I spend this money.” Consider this: an economically healthy country is made up of economically healthy citizens. And when you strengthen your own financial health, you lessen your risk to the whole. Sure, you might spend your stimulus check in the coming months—but bringing yourself to a financially stable place helps everyone.

Want to make a thin cushion even plumper? Join the More Money Challenge and let your stimulus money help you start strong on a money-saving sprint. The average participant saves $1,000 in just over a month!

If you have solid financial footings:

You’ve set up your finances to weather a storm (though you weren’t planning on a storm quite like this). We tip our hats to you, but we all know there’s no victory dance to be had here with so many hurting. It’s tempting right now to shelter in the well-built security of your strong financial health—but maybe what’s best for your financial immune system is to look outward instead of turning inward. How can your strong position help someone in a weak position? 

Donate your stimulus money to an organization that’s helping, pay for someone else’s groceries, or earmark a set amount for random acts of giving.

Even if it's a partial amount of your stimulus money, an extra dose of generosity could be the superfood you didn't know existed.

4. Give Every Dollar a Job

Once the money hits your bank account and you’ve thought through these questions (all nice and calm-like), give every dollar a job. You might have a lot of jobs to dole out—a family of four could be looking at $2,400 in stimulus money! Maybe you earmark $300 for that future car repair, or you pad the cushion of your emergency fund.

Covered your essentials and you just want to order Chinese take-out tonight? Yep, that’s a worthy cause too—send $60 to your “eating out” category. That’s the beauty of a budget: responsible saving and guilt-free spending.

5. Use Your Budget to Keep You Steady

The budget can calm you when things feel bleak—and there’s plenty of that going around. Sure, there’s still uncertainty in spades, but now you’ve got the facts laid out in front of you with your budget. Use this shot of stimulus money to tend to your immediate needs and bolster your financial health for the near future. Sure, there are a lot of things still well out of your control, but getting a handle on your financial health can be one less thing you have to worry about.

Don't have a budget yet? Sign up for a free 34-day trial with YNAB to get a handle on your finances in any state or circumstance.