UPDATED APRIL 2021

Making the Most of your Rebate USAA Community.jpgA little more than a year ago, the idea of economic impact payments or multiple rounds of stimulus checks would have seemed nonsensical. Fast forward to today and it’s part of our new reality. It’s easy to be overwhelmed by the nonstop flow of news, numbers, and updates. However, it seems like we can see the light at the end of the tunnel. Together, we will see this through to the other side.   

 

The CARES Act, the American Rescue Plan and, in between, the Consolidated Appropriations Act, were all designed to be part of what helps us do just that. Here, I wanted to spend a few moments discussing the various stimulus payments provided by these pieces of legislation. Or more specifically, your plan for those payments.

 

While the amounts and eligibility rules have varied, the checks have provided some much-needed relief for millions of Americans. For others, they have created an opportunity to make some headway with their own personal finances. 

 

How you have deployed and will deploy the money should be based on your personal situation. In other words, your strategy with money received as part of the American Rescue Plan might be different from your approach last spring when the CARES Act checks were issued. Here are a few ideas for people in different circumstances: 

 

Single servicemember, dual-military couple or one income military family. It’s likely that from a financial perspective – if no other – it’s been business as usual for you over the last year plus. Consider the additional influx of cash from the stimulus check as an opportunity to build or rebuild your emergency savings, pay down high-interest debt accumulated during the pandemic or even save for longer-term goals. Perhaps, even a vacation as travel opens back up or on the financial side, an IRA contribution. 

 

Military member plus wage-earning spouse. Over the last few months, we have seen U.S. employment really starting to bounce back. However, if you escaped the pandemic financially unscathed, it’s not too early to prepare for the next potential job loss. That’s especially true if both your incomes are needed to meet your core expenses and your non-military wage-earner has income that is geographically based. Military life tends to create income disruptions for families like this. Consider setting aside your stimulus in emergency savings. Once you’ve fully funded your emergency fund – the equivalent of three to six months’ expenses – you can look at deploying remaining money to other short and long-term goals. This is also a good time to work your budget and make the tough spending decisions that will allow you to be less dependent on both incomes.  

 

Non-military individuals or couples. Remember, two-thirds of our economy is based on consumer spending. If recent economic numbers are an indicator, that’s starting to happen...the spending. In fact, the better employment numbers I referenced earlier combined with increased government spending all equate to significant economic growth. However, we never know what lies around the corner. To that end, consider playing it safe. Let your neighbors fuel the economic rebound while you use the stimulus to establish or bulk up your emergency savings, pay down debt and save for other goals.  

 

 

There’s a lot going on, much of it good. However, it’s never a bad time to prudently manage the resources at your disposal. If we all do that we can get to the post-pandemic world with as little pain as possible. 

 

Related Posts: 

Understanding the Coronavirus Aid, Relief, and Economic Security (CARES) Act 

 

 

About the Blogger: JJ Montanaro is a Certified Financial Planner® professional and part of the Military Affairs team at USAA. He’s a graduate of the U.S. Military Academy and has over 20 years of financial planning experience. 

 

 

Disclosures:

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED

FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.

The information contained is provided for informational purposes only and is not intended to substitute for obtaining professional financial advice. Please thoroughly research and seek professional advice before acting on any information you may have found in this article. This article in no way attempts to provide financial advice that relates to all personal circumstances.

 

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