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7 Ideas to Put Your Stimulus Payments to Work for You

While data indicate that many Americans have been squirreling away funds during the pandemic, stimulus payments could present a bigger opportunity to help change the course of your financial future.

Kallee Feuz Mar 19, 2021

With three rounds of Economic Impact Payments since April 2020 — including the most recent stimulus offering benefits for families with dependents — many consumers have seen their checking account balances rise.

While data indicate that many Americans have been squirreling away funds during the pandemic, stimulus payments could present a bigger opportunity to help change the course of your financial future.

Consider these 7 ideas to put your stimulus payments to work for you.

Stimulus payment idea #1: Fund a home project

If spending more time at home has you hankering to do some home improvements, it could be a wise use of stimulus funds. Enhancing your home’s curb appeal is one of the most effective ways to boost its value, according to Remodeling Magazine’s 2020 Cost vs. Value Report. The report found that exterior improvements generally yield the greatest return on investment.

Stimulus payment idea #2: Make a down payment

Depending on the type of mortgage loan you choose, you will need to put down anywhere from 3% to 20% of the purchase price of the home. For a $250,000 house, that’s a down payment of between $7,500 to $50,000.

Even if your stimulus funds don’t add up to a full down payment, they could get you one step closer to the goal of home ownership.

Stimulus payment idea #3: Bump up your emergency fund

Professionals recommend setting aside 3 to 6 months’ worth of living expenses in an emergency fund. Keeping extra cash in your bank account not only makes a medical emergency or unexpected car repair far less stressful, it also helps you steer clear of costly sources of quick cash like high-interest credit cards, short-term loans and payday loans. In the event of job loss or reduced pay, an emergency fund can help you cover mortgage or auto loan payments and hopefully avoid foreclosure.

Stimulus payment idea #4: Pay off credit card debt

The average credit card charges nearly 15% in interest if you carry a balance. That means that if your credit card balance averages $3,000 over 12 months, you will pay about $450 in interest during the year. Apply your stimulus money to erase that $3,000 debt, and you would save $450 in interest: a 15% return on your money. Plus, paying off your balance will free up more income each month.

Stimulus payment idea #5: Bump your retirement savings

Along with regular contributions made to your retirement accounts, you can give your nest egg a nice bump by adding a lump sum amount. Check with a professional to see whether a traditional IRA — which gives you a tax break now — or a Roth IRA — which lets your money grow tax free — will work best for you. Someone who invested a one-time $3,000, and earned an average 8% rate of return, could see this grow to more than $70,000 in 40 years. This savings calculator can help you figure out how much a one-time investment can grow thanks to compound interest.

You can think of your stimulus check as the first step for building regular retirement savings with options like a Zions Bank IRA Money Market Account[cite::8820::cite],[cite::8821::cite] which is ideal for making periodic deposits or when you want to automate deposits. A Zions Bank CD IRA Account[cite::8820::cite],[cite::8821::cite] helps you grow your retirement savings for a specified term.

Stimulus payment idea #6: Add to college savings

The average student borrower leaves campus with $30,000 in student loan debt, according to LendEDU. You can help your child reduce the need for student loans if you save money for their education. Money saved in a 529 plan grows tax-free when the funds are used for qualifying educational expenses.

Stimulus check tip #7: Indulge a little

A little splurge might be just what the doctor ordered after a prolonged period of pandemic-related stress. But you can get an emotional boost without wiping out all your savings gains. Plan a socially distanced mini road trip or treat yourself to a small purchase as a reward for being wise with the lion’s share of your windfall. You’ll feel better in the long run knowing you’ve made progress toward your long-term goals.

Stimulus checks are intended to boost the economy, but they can also boost your personal financial wealth if used wisely. For more timely financial tips and strategies, visit the Community section of the Zions Bank website.

Kallee Feuz is a Public Relations officer for Zions Bank.

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