The IRS announced that the $1,400 stimulus checks are on its way to the American people, based on the signing into law, the American Rescue Act of 2021 on March 11, 2021. The first payments were sent direct deposit and some people have already received it as early as March 12th. Other payments will be sent via direct deposit and through the mail as a check or debit card.
Status of Payment
To find out when and how you will receive your stimulus payment, you can go to the IRS website and track your payment status. You can click on the link to check the status: Get My Payment.
Third Stimulus Check Calculator: How Much Am I Getting?
If you want to know how much you will be receiving in the third stimulus check, you can calculate it via Turbotax Third Stimulus Check Calculator. Suppose a family of four, parents filing married filing jointly with 2 kids that are dependents, meet the threshold to receive the full stimulus check amount. This would be $5,600 total stimulus check payment. You can check a stimulus payment calculator to see your estimate of your payment. Turbotax has a stimulus check calculator.
Survey of What to Do with Stimulus Check
According a survey by Bank of America, in which they surveyed 3,000 people as to what they plan on doing with the third stimulus check, most of them will save rather than spend it. Not many plan to spend the money which will help the economy with the money flow into purchases of goods and services. Here is the breakdown:
36% would spend money
30% would payoff debts
25% would save it
9% would invest
Bank of America grouped the last three together and categorized it as ‘savings’ since these are payments within the financial system and does not create demand for goods and services. Based on this, the results are 79% of the respondents with high income over $120,000 said they would save it. 53% of the respondents with income less $30,000 said they would save it.
What to Do with Stimulus Check: Save or Spend?
Depending on your financial situation or financial health will determine what you should do with the stimulus money.
Pay Down Debt
If you have accumulated debt, you should use a portion to payoff your debt. To determine your financial situation, you should have a personal budget of what’s your spending monthly and yearly.
Save
If you don’t have debt or bills to pay, then next step is to save it. You can save it in an online savings account with a higher interest yield. If you don’t have one opened, consider opening one and deposit a portion of your stimulus check into the savings account. Then consider doing automatic direct deposits once a month from your paycheck. You will be surprised how quickly it builds.
Invest
You can also consider investing in the stock market. Now this I say with a caveat. Do not put money in the stock market that you need right away. This is considered a long term investment and is volatile, where you money will fluctuate up and down. It’s not guaranteed you make money.
Personally, I have an online savings account where I put my savings. However, since interest rates are so low, the online savings account will only yield about .5% interest currently.
I also invest in stocks. Stocks can yield a return of double or triple digits. If you were bold enough to not sell your stocks when the market took a nose dive due to COVID, but instead buy high valued stocks at very discounted prices, today you would have double or triple digit returns. You can’t get that type of return in an online savings account.
I will give you an example. ROKU lowest stock price in 2020 was on 3/16/2020 at $63.84. It’s highest stock price was on 2/16/2021 at $469.70. If you were bold enough to buy ROKU at the low price and sell at the high price, that’s over 600% return on your investment. That’s a triple digit return in one year! This is not normal returns in the stock market but we are in unknown territory. Do stocks continue to go up? No. For example, ROKU stock price as of 3/16/2021 is $353.58. That’s almost 25% drop from the high price of $468.70. You can see there is risk and reward in the stock market. (Note: ROKU stock prices were obtained from Yahoo Finance website historical data).
In summary, determine what your financial situation or financial health is in order to determine what to do with the stimulus money. As stated, you should have a personal budget to know your monthly spending and years spending.
If you have accumulated debt with high interest rates (ie – credit card debt), pay it down first. Next, consider saving the money in online savings. Finally, if you can afford to take more risk with your money, invest in the stock market. Before investing, do your homework and research a company before you invest. Finally, you can also spend it. But for me personally, that would be the last option.
To find out your financial health and your money habits, contact me for 1-on-1 sessions and programs offered to teach you about money, spending behaviors, budgeting, tracking your spending. Click the Contact or Take Action button.
Citation:
Fox, Matthew. “A Majority of the Upcoming $1,400 Stimulus Checks Will Go Towards Savings Rather than Spending, According to BoFA Survey.” Markets Business Insider, 10 March, 2021, https://markets.businessinsider.com/news/stocks/stimulus-checks-upcoming-1400-go-towards-savings-bofa-survey-2021-3-1030170204
