Fourth Stimulus Checks May Be Coming: 10 Smart Ways To Spend It

Black businesswoman with protective face mask using smart phone and looking through the window while commuting by bus.
Drazen Zigic / Getty Images/iStockphoto

With the third stimulus check in most Americans’ bank accounts, talk of a fourth is already on everyone’s minds.

Related: Most Americans Used Stimulus Check To Pay Bills

Surveys from the past two stimulus checks showed that people spent the majority on paying off debt. Another quarter or so used the money for regular expenses, according to the Census Bureau. But Biden’s popular $1.9 trillion relief plan has left consumers wanting more. 

If another  payment eventually does arrive, what’s the smartest way to spend it? Here are some suggestions as to how you might consider using any additional stimulus payments.

How Do You Get a Stimulus Check Deposit?

Before you can get a stimulus check, you’ll need to qualify. For the third stimulus check, the IRS used your tax filing status and the adjusted gross income (AGI) from your latest tax return to determine your stimulus payment amount. According to the American Rescue Plan Act (ARPA), you and your dependents qualified for the full $1,400 payment if: 

  • You’re an individual with an AGI of up to $75,000
  • You’re a head of household with an AGI of up to $112,500 
  • You’re a couple filing jointly with an AGI up to $150,000
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To put this into context: A couple that earns $100,000 and files jointly, with two children, will receive $5,600 — that’s $2,800 for both adults and $2,800 for both children.

Payments were in the amount of $1,400 per individual, or $2,400 for joint filers. Those with children received an additional $1,400 per child. This means that a couple that earns $100,000 and files jointly with two children will receive $5,600 — $2,800 for both adults and $2,800 for both children.   

Find Out: Could You Start Getting Monthly Stimulus Payments?

How Do You Spend a Stimulus Check?

If you receive a stimulus check, you’re free to do what you wish with it. However, there are some options that are more financially prudent than others. Rather than asking how you can spend your stimulus check, you should at least consider how to invest your stimulus check. Here’s a look at some of the best ways to use your stimulus check.

1. Pay Your Bills

If you’re got some outstanding or overdue bills, use your stimulus check to pay those off. Since the stimulus payment is essentially “free money” from your perspective, it’s a great way to pay your bills without having to dig into your emergency savings or your regular paycheck.

2. Pay Off High-Interest Debt

Debt is a killer when it comes to savings, especially high-interest debt like you’ll find with credit cards. If you take your stimulus check and pay off that high-interest debt, it’s like getting a free double-digit investment return. For example, if you owe $1,000 on a card charging 15% interest, you’re paying $150 per year in interest. Using $1,000 of your stimulus check to pay off that debt saves you at least $150 per year, or the equivalent of a 15% investment return on your money.

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3. Start an Emergency Fund

Most Americans have trouble saving for emergencies. In fact, a recent GOBankingRates survey revealed that nearly 70% of Americans don’t even have enough saved to cover a $1,000 emergency. If you want to jump-start your emergency fund, tuck away your $1,200 stimulus check and you’ll immediately be ahead of the game.

4. Save for Retirement

Just as it is hard to save for emergencies, it can be a struggle to save for retirement. However, the sooner you start, the better. Since the stimulus check amounts to “found money,” there’s no pain involved on your part in depositing that cash into your retirement plan. Let’s say you put $1,200 into an IRA and earn 7% per year. After 20 years, that “free money” will become nearly $5,000.

See: Retirement Planning Steps You Aren’t Taking Now, But Should

5. Give It Away

Some Americans have been blessed during the pandemic and aren’t in need of any additional stimulus money. If you find yourself in that camp, don’t just blow the money — give it to a person or institution in need. In addition to making the world a better place, you might be able to take a tax deduction for your donation — in which case, you’re still receiving a monetary benefit from the second stimulus check.

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6. Improve Your Home

It’s likely that you’re spending a lot more time at home during the pandemic since it’s harder to go out. Your company might even be letting you work from home. If that’s the case, consider taking your stimulus check and using it to make some improvements around the house. Not only will you enjoy a refreshed space, you might add to the value of your property.

7. Tuck It Away in a High-Yield Savings Account

Interest rates are at all-time lows, but you still can earn a decent yield on your money by finding a good high-yield savings account. While major banks don’t offer much interest on idle cash, many online banks still pay over a 0.50% APY. Those types of rates won’t get you rich, but if you’re just parking the money until you need it, it’s much better than earning 0%.

8. Add To Your Long-Term Investments

If you’ve already got all your immediate financial needs covered and you have a sizable emergency fund, consider adding your stimulus check to your long-term investments. Over time, your stimulus money will grow at a compounded interest rate and add to the nest egg you’ve already begun building. What might seem like a small stimulus payment today could end up growing by a considerable amount over time.

Take a Look: 7 Best Long-Term Investments To Consider

9. Save For Your Kids

With the cost of a college education rising more rapidly than the inflation rate, every little bit you can add to your kid’s college fund can help. To get the most bang for your buck, look into investing in a 529 college savings plan. These types of plans offer tax advantages and many investment options and can be a great way to boost your college savings.

Invest in Yourself

Unemployment has hit the American economy hard in the past year. Whether or not you’ve managed to escape the damage, it’s always a good time to retrain yourself, learn some new skills and make yourself more marketable. Using your stimulus check to invest in yourself by taking a class or otherwise keeping your training current can be a great way to make yourself stand out in an uncertain job market.

10. Help Out Local Businesses

American businesses have been hit hard by the coronavirus pandemic. You might have noticed that some of your favorite shops or restaurants have closed. To help prevent further economic disaster in your community, take your stimulus check and help out some of your local businesses.

Find Out: Biden’s Stimulus Gave Schools Billions to Re-Open Safely – Why Are So Many Still Closed?

Is a Fourth Round of Stimulus Checks Coming?

Many have said it is unlikely, but a poll from Data for Progress states roughly 65% of Americans favor at least a monthly payment of $2,000 per month. 

Many in Washington believe it will be difficult to secure a fourth payment with Biden’s focus on the infrastructure bill and a goal to have 90% of adults vaccinated by June. Even so, other relief could be on the horizon. Child tax credits and extensions to unemployment insurance could take the place of another direct stimulus check. 

Should more stimulus arrive, it’s a good idea to keep on hand several options for where to best invest the money.

More From GOBankingRates

Georgina Tzanetos contributed to the reporting for this article.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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