What should you do with your stimulus control? The experts weigh in. – Community News
Stimulus Check

What should you do with your stimulus control? The experts weigh in.

Consumers should spend their instant cash portion of the $2 trillion coronavirus relief package passed by the Senate on basic necessities — or put the money in an emergency savings account, personal finance and economic experts say.

The state aid provides up to $1,200 per person up to certain income thresholds, with an additional $500 per child. The IRS will determine eligibility based on the 2018 or 2019 tax return. If a taxpayer has not yet filed it, they must do so in order to receive their payment.

“Before this is over, millions of people will lose their jobs,” said Elise Gould, a senior economist at the Economic Policy Institute, a nonprofit think tank that focuses on issues affecting low- and middle-income workers. “This will help fill some of those gaps.”

For consumers who have already lost significant income or fear that layoffs are imminent, the money should be spent on basic necessities such as rent, groceries, prescriptions, gas and utilities, said Greg McBride, Bankrate.com’s chief financial analyst.

Consumers looking to ease the strain on their household budgets should also contact their mortgage or car loan lender to request a temporary hold on their monthly payments, and talk with creditors to discuss other repayment options, he said.

If consumers are still at work and their needs are being met, they should put this money in their emergency savings account. If they don’t have one, now is a good time to open one.

The savings should be in an easily accessible, safe and liquid place – not a mattress or shoebox that can be broken into. Instead, look to a money market fund or high-yield savings account, Nilay Gandhi, senior financial advisor at Vanguard Personal Advisor Services, told NBC News.

How the payments will be used is up to each individual, Gandhi said. If their family has a household budget, the funds should be considered within the budget. If the family doesn’t have a budget, now is a good time to set one up.

Households that are financially secure and have already covered their basic needs and savings may be able to use the money to top up their savings for their child’s education or retirement.

Households that are financially well-positioned to weather the outbreak and want to help those in greater need can donate their refunds to charity, a local food bank, or a disease-fighting group such as the CDC Foundation.

While some have called the aid package a “stimulus” to the economy, others say it is more of an “income support program.”

“Normally, when governments try to stimulate the economy, a cash transfer can allow people to spend more, buy more and eat out more, all of which help the economy grow,” Aparna says. Mathur, a scientist at American Enterprise Institute, a conservative think tank.

If people have been told to take shelter in their place and take every precaution, they will not go out and spend more.

“The idea of ​​the stimulus is not to boost the economy now, but rather to help households under financial pressure and prevent consumers from falling further behind,” McBride said.

The goal is to feed families, keep a roof over their heads and keep the lights on. It’s not about shoppers spending more than they normally would.

Perhaps when the pandemic is over, if there is any money left, it can be safely spent on something more than covering the essentials.

“The ‘stimulative’ aspect of the money transfer may come into play later when the health crisis is over,” Mathur said.

Despite the millions of dollars being shipped, Gould says she doesn’t think payment to consumers will be enough.

“It’s a one-time check,” she said. “They still have to pay their bills month after month.”

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