DOGE Dividend: 4 Things You Should Do First If You Get Your $5,000 Payout
Written by
John Schmoll
Edited by
Amber Barkley
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President Donald Trump may have tapped Elon Musk to head the Department of Government Efficiency (DOGE), but now with the richest man in the world announcing his (partial) departure from the task, a lot of initiatives feel up in the air. Musk has announced that going forward, he plans to work just one or two days a week.
As a part of his efforts that could be left unattended, Musk has mentioned the idea of a DOGE dividend check to give $5,000 to qualifying Americans to share in the savings found by the group. The savings in this case are what Musk claims his federal workforce initiative has saved, to the tune of $160 billion, which is somewhat short of the original aim to slash “at least $2 trillion” from the federal budget.
The dividend isn’t guaranteed, as it would require Congressional approval plus achieving the stated savings goal. Moreover, only households that pay federal income taxes would qualify to receive funds. However, if the DOGE dividends do come to pass, here are four wise ways to spend the $5,000 in found money.
Start or Grow Your Emergency Fund
Many Americans are struggling to make ends meet. Starting or padding an emergency fund with the $5,000 can be a good way to provide peace of mind relative to financial stress.
A significant portion of Americans have limited emergency funds, which falls short of what most experts recommend, which is having three to six months of living expenses saved for emergencies. A $5,000 DOGE check would expedite reaching that goal if you have little in savings. Furthermore, in this volatile economy, many are finding the consumer sentiment to be declining, making saving money a good choice in case of tough spots.
Pay Off Debt
Credit card debt is suffocating and can keep many people from reaching personal goals. Applying a majority of the $5,000 DOGE dividend check against credit card debt can accelerate achieving debt freedom.
Americans held $1.21 trillion in credit card debt as of the end of last year. Although not a fun way to use the extra funds, putting $5,000 toward repaying high-interest debt may save you thousands of dollars in interest.
Save for Short-Term Goals
Receiving an unexpected $5,000 can significantly boost making goals a reality. If you have ample savings and little to no debt, analyze your short-term goals. These can be anything you want to achieve in the next one to three years.
Possible goals can include:
- Purchasing a new-to-you car
- Buying a house
- Home improvements
- Extensive travel.
Putting the extra $5,000 in a high-yield savings account boosts those efforts without sacrificing longer-term goals.
Jumpstart Retirement Savings
A growing number of Americans are falling behind with retirement planning, many fearing, or downright knowing, they don’t have enough in their account to retire comfortably. Funding a retirement account with $5,000 can be a good way to boost the efforts of Americans losing ground on retirement.
Roth and traditional IRAs are two top choices, with the latter providing a potential immediate tax benefit. Saving $5,000 may seem insignificant in the grand scheme of retirement needs, but setting aside money earlier rather than later will help you more in the long term, as the interest will compound over time.
There’s no guarantee the DOGE dividend check will become a reality. However, if the funds are dispersed, people who use them with a wise plan — versus unnecessary spending — will benefit greatly.
Caitlyn Moorhead contributed to the reporting for this article.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com
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