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Tips From A Financial Counselor On Using Your Stimulus Check

Photo illustration showing a piggy bank and dollar bills
401(K) 2012 via Creative Commons
Amanda Christensen, a financial counselor and editor of the Utah Money Moms blog, offers advice to Utahns receiving stimulus checks from the federal government.

This week, Utahns began receiving stimulus checks from the federal government. To get some expert advice on how people can best use that money, KUER’s Caroline Ballard spoke with Amanda Christensen, a financial counselor and editor of the Utah Money Moms blog

This interview has been edited for length and clarity.

Caroline Ballard: How good are people, generally, at managing their money?

Amanda Christensen: Sixty-five percent of folks don't have emergency savings. Seventy-five percent don't have a written plan. I think we have good intentions, but if we don't give ourselves a little bit of wiggle room and flexibility in our budgets, sometimes it's hard to stick to things when we're furloughed suddenly because of COVID-19 or when a major life transition happens. And we're just not ready to handle it, so we blow our budget. We rely on credit cards. Part of the struggle with ongoing personal financial management is to be flexible.

CB: People across the country are starting to receive their stimulus checks from the federal government. Depending on how much you make, households can receive up to $1,200 per adult, plus $500 for each dependent. If you're struggling and have lost income because of COVID-19, how should you prioritize that money? Should it go towards recurring bills like groceries and rent, or should you use it to pay down debt?

AC: If you are struggling right now, this is money that must be used to play catch up. And it's being talked about a lot as stimulus money, money to throw back into the economy. In other words, money to spend. When in reality, if you have missed a rent payment, or you're not current on utilities or transportation, those are expenses that have got to be prioritized and caught up with. 

I know that there are plans in place, and there are some things happening now that are sort of unprecedented, even, for skipping payments or allowing the chance to get caught up later. But if we don't plan for that now, it is going to feel like a world of hurt later for people.

CB: How far can that money actually go? Is this one-time payment enough to make a difference for people when there's no real guarantee of when or if things will go back to normal?

AC: I think the one-time payment can make a temporary difference. So that's a great thought for people to consider — what's the biggest bang for my buck with this stimulus money? 

For sure, again, prioritizing mortgage, rent, utilities, transportation. Getting caught up there. If you are caught up there, then considering where's your emergency savings at? Did you have to deplete and rely on some of it recently? Is it time to build that back up so that you're prepared for this to continue and possibly need to rely on emergency savings in the near future again? 

I think about student loans. Right now payments and interest [are] suspended until Sept. 30. If you have the ability to still pay on those student loans — essentially, if you make a payment after March 13, that payment goes directly to the principal balance on those student loans. It's going to save you on the cost of repaying that loan even more so. 

CB: What about for people who feel pretty good with where their finances are. They're not struggling as much. They feel good about savings and want to use that money to help their communities. What can they do there?

AC: There's a lot of things we can do to be mindful of small businesses — of local places that are struggling. 

One of the things I recommend with folks getting a tax return is to break that money out into percentages to decide how to use it. I would visualize a pie chart with sections for giving and for spending and then possibly a section also for saving. 

I also like to recommend that people take a chunk of that money and spend it on whatever makes you happy. Spend it on some things that are going to help stimulate the economy but at the same time are going to allow you the feeling of a little bit of financial freedom. Even if that's 10, 20 dollars, it really goes a long way to know that you have money that you're going to be able to spend, and then it helps you also to not blow the budget which sets off a chain of events for months to come.

CB: How do downturns change how people see and interact with their finances?

AC: Any problems that seemed small before tend to seem a lot bigger now, especially with a loss of income. That's just devastating. Even if it's a temporary short-term furlough, it's just a devastating thing when all of the sudden your world's turned upside down, and you've got to make daily changes to your habits and to your spending to get by. 

It can, though, be an opportunity for growth, for ideas, for flexibility, for simplicity. There can be some really great things that come from these situations, too.

Caroline Ballard hosts All Things Considered at KUER. Follow her on Twitter @cballardnews

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