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6 Smart Ways to Spend Your Stimulus Check

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Maria Neira
March 23, 2021

Stimulus checks continue to go out providing much-needed financial relief to millions of people. If you are eligible and haven’t received your check yet, the IRS announced another round of payments are due to land in bank accounts and mailboxes on March 24.  

The latest round of payments are in accordance with the American Rescue Plan Act of 2021, signed into law on March 11, 2021.     

Back in March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed. The $2.2 trillion economic relief package gave many families and workers immediate relief by providing a stimulus check in an amount based on income. For many, that check was in the amount of $1,200. 

The next round of economic payments were part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, which the government signed into law at the end of December 2020. In addition to the $600 per adult payment, the relief package includes $300 per week for unemployment (for 11 weeks total), about $284 billion for Paycheck Protection Program loans, $25 billion in rental assistance, and $82 billion for schools and colleges.

The pandemic has had a huge impact on our finances. For many, that’s meant either changing spending habits or creating a budget. Thinking about ways to save more money and creating emergency funds have become a priority.

Coronavirus financial relief for household bills

Auto insurance

In addition to the IRS stimulus payments, auto insurance companies have issued refunds to help their customers. They have also waived fees and expanded coverage for essential workers.

If you have a federally backed mortgage, homeowners can request a pause on payments for up to 180 days. Homeowners will also not be foreclosed on during this time. Your relief options will vary depending on the type of loan you have. 


Private mortgage lenders are also offering similar relief efforts to their customers. For example, Wells Fargo will let customers request a temporary pause on their loan payments as well as waive fees and not report late payments to credit reporting agencies. Be sure to contact your lender for specifics. 

Auto loans

Automakers are also rolling out options to help those affected by the coronavirus. Whether you are having trouble making your current auto payments or need to buy a new car right now, assistance is coming in the form of deferred payments and extremely low interest rates.

Credit cards

Some credit card companies are also lending a hand to their customers. Some cardholders may be eligible for payment deferrals, credit line increases and fee waivers. Rewards card holders may see extended dates allowing you to use your points or offering additional points.  

Smart ways to spend your IRS stimulus check

If you receive a $1,400 stimulus check, it’s tempting to spend it on everything you have saved in your Amazon shopping cart. But you and I both know there’s a better way to use that money. 

If you are fortunate enough that your budget can cover your basic needs (food, utilities), here are six smart ways to use your stimulus check funds. 

1. Reduce credit card debt

The latest IRS stimulus check amount is $600. Using that money to pay down or pay off a credit card is a great idea. If you have more than one credit card with a balance on it, either pay off the credit card with the highest interest rate first or the one with the lowest balance first.  

2. Pay your auto insurance in full

Auto insurance isn’t something most of us like to deal with, but it’s a bill all of us have to pay. If your auto insurance policy is up for renewal, consider paying your policy in full. Most auto insurance companies will offer a discount for a paid-in-full policy. If they don’t, it could be a great time to shop for new auto insurance.

3. Start an emergency fund

If you have your necessities like food and utilities covered, consider starting an emergency fund (or boosting your current fund). Whether you deposit your stimulus money (or at least part of it) into a savings or money market account, you won’t regret it. From an unexpected healthcare expense or a broken appliance, you’ll be happy to have even the tiniest savings cushion in these situations. Check out some of the best savings accounts from Nerdwallet. 

4. Use it at the grocery store

The Bureau of Labor Statistics reports that the average American spends $3,459 a year on dining out. As more states have lifted coronavirus restrictions, it’s tempting to head to your favorite local restaurant. Instead of spending your money at bars and restaurants, head to your local grocery store for serious money savings. 

5. Add it to your retirement savings

Thinking of retiring early? Adding any extra funds to your retirement savings accounts is a great way to meet this goal. Consult your financial advisor as to the best use of your stimulus check money whether it’s for your 401(k) or an IRA.

6. Donate to charity

In the wake of the coronavirus pandemic, there is no shortage of charitable organizations asking for donations. Some charities are looking for very specific donations, such as non-perishable food or baby items. But most organizations are more than happy to accept any cash donation as well. Charity Navigator helps you vet nonprofits to ensure your money is going to a reputable organization and good cause.

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