At the very end of 2021, the federal government approved a second stimulus payment for Americans. You may have already started to see the money hit your bank account from the IRS, if they had direct deposit information on hand for you. This payment is $600 for each qualifying adult and child (aged 16 or younger). Depending on your income, you may see a lower amount or nothing at all. No matter how much you get – the full $600 or a smaller amount – you may be wondering how you can best invest that money. Here are 5 ways to invest your 2nd stimulus check.
Pay off bills or debt: If you’ve had challenging financial times lately, you could use the money to pay bills or pay down credit card debt or other debt you have accumulated. If you don’t know what to pay off first, start with higher interest debts and work your way to other debt. This is a great way to invest your check, so that you can reduce those stresses and be better prepared for the future.
Save for retirement: Invest your stimulus check in a retirement account (like the IRA, which has a maximum contribution for 2020 of $6,000). The stimulus check can help you open your IRA, if you don’t already have one, or you can invest it in your existing IRA.
Donate it: There are many great organizations at the local and national (and even international) level that are doing good work in their communities. If you have a favorite charity, you could donate part or all of your stimulus check. Especially right now, many nonprofit organizations are working very hard to ensure families in their communities are getting by, and donations can go a long way to make a difference. In Arizona, there are many organizations that are Qualifying Charitable Organizations and you could even get a tax credit for your contribution.
Create an emergency fund: Let’s face it – we don’t know what’s going to happen. Many people lost their jobs or saw hours cut during 2020. Businesses closed. There’s never a guarantee that your job is safe, so having an emergency fund is more important than ever. That emergency fund can help your family in the event that you are between jobs or even just when unexpected expenses come up (like if a car breaks down). Investing your $600 stimulus check into savings can help you feel more comfortable as you face the unknown.
Start a 529 college fund: If you are looking for a way to set your children up for a successful future, one thing many people turn to are the 529 college funds. With tax and financial aid benefits, these funds can be a great way to start investing in a future college education.
No matter how you invest your second stimulus check, the money is going to go a long way to help Arizona families during these unprecedented challenges.