How To Use Your $1,200 Stimulus Check

Here's how to use your $1,200 stimulus check from the government's coronavirus relief package

Aimee Picchi, USA TODAY March 30, 2020

Millions of workers and their families will receive a one-time check from the government as part of the coronavirus stimulus package. Most adults will get $1,200, while children will receive another $500.

For workers who have already lost their jobs because of the pandemic’s hit to the economy, that extra money will likely be immediately put to good use — paying rent, mortgages, utility bills and more.

But if you have a paycheck, what’s the best use of that money? Should you save it, pay down debt or spend it to help keep your local economy working?

It’s a tricky calculation given the unknowns facing many families, such as whether the pandemic will linger for months or if businesses will resume normal operations within weeks. Layoffs are rippling through the economy, not only hurting restaurant workers but professionals such as lawyers and insurance providers.

On top of those “what ifs,” America’s outstanding credit card debt and other types of revolving debt have reached an all-time high.

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“The natural reaction is to use it all to pay down debt,” says Matt Schulz, chief industry analyst at CompareCards. “Paying down debt is a good thing, especially in crazy economic times, but it can make a lot of sense to take a little bit of that money you were going to put toward debt and stash it in a rainy-day fund.”

The fact is, four in 10 adults say they would struggle to come up with $400 in an emergency, according to the Federal Reserve’s annual check-in on Americans’ financial health. Given that millions of Americans are likely to face a fiscal crunch in the coming weeks, they should consider putting part of that stimulus check aside for that potential emergency, experts say.

A Financial Buffer During Coronavirus

Financial experts typically recommend socking away between three to six months of income in an emergency fund, a goal that may seem out-of-touch with the daily realities of many families even in the best of times.

But research from the JP Morgan Chase Institute has shown that most households need much less than that to create a helpful financial buffer — in fact, six weeks is typically enough. (You can use this widget at JP Morgan Chase to determine the size of your ideal buffer.)

While that might represent a big chunk of your stimulus check, having the money set aside can help you avoid a cycle of high-interest debt, Schulz notes.

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