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6 smart ways to spend your third stimulus check

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Under a new stimulus bill signed by President Biden, millions of Americans will receive a third stimulus check in the coming weeks. Round three payments will be $ 1,400 per eligible person, plus an additional $ 1,400 for each eligible dependent (use our third pacing control calculator to see how much you will get). Many families who lost income during the coronavirus pandemic will have to use their checks to put food on the table or keep a roof over their heads. But if you’re still fully employed and not in financial trouble, consider putting your stimulus check to work.

With many restaurants still closed and most events closed, it’s harder to “spoil” your third stimulus check while on vacation, eating out, going to a concert, and so on. So instead of spending your third stimulus check on something you really don’t need, consider investing, saving, or donating the money you get from Uncle Sam.

Here are 6 ways you can make your third stimulus check work for you or help your community.

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Saving money for retirement is always a smart move. You have until May 17, 2021 to invest in a Traditional or Roth IRA for 2020. The maximum contribution for a 2020 IRA is $ 6,000 – $ 7,000 if you are 50 or over – so you can fit it there. your entire stimulus check if you don’t. I don’t need it for anything else.

If you’ve already invested the maximum for 2020, consider investing in a Traditional or Roth IRA for 2021. Contribution limits are the same as for 2020. You have until April 18, 2022 (April 19 for residents of Maine and Massachusetts), invest in an IRA for 2021, but the earlier you invest, the more time your money will have to grow.

Interest rates are low for student loans, mortgages, and bank savings accounts, but if you have credit card debt, you’re probably paying over 15%. You can free up a lot of money by paying off those cards – and paying off your debt gives you a rate of return you can’t find anywhere else, says Benjamin C. Simiskey, CFP in Katy, TX. If you manage to pay off the entire balance, you also eliminate a monthly expense, he adds. “It’s the best of both worlds.”

If your finances are in order and your job is secure, consider using your stimulus check to help those who don’t share your good fortune. You can deduct part of your donation on your 2021 tax return even if, like most taxpayers, you claim the standard deduction. This is because there is an “over the line” deduction of up to $ 300 of cash donations. This new deduction was initially allowed for 2020 returns only. However, the second government spending and COVID relief bill extended the charitable deduction for non-retailers by one year. It also allowed married couples who jointly deposit to deduct up to $ 600 in cash donations (in 2020, the maximum a married couple can deduct is $ 300).

You cannot claim the deduction above the line if you itemize – in this case, you will have to deduct your contributions on Schedule A of your tax return. But there is also pandemic-related relief for 2021 retailers looking to make major contributions. The amount that retailers can deduct for cash contributions is typically capped at 60% of their adjusted gross income (any cash donation greater than this amount can be carried forward for up to five years and deducted later). However, Congress lifted the 60% limit of the AGI for cash donations made in 2020 and 2021, although there is still a 100% AGI limit on all charitable contributions.

Although the unemployment rate is lower now than it was earlier in 2020, many people still don’t feel very comfortable with their employment situation. Even if you are working now, the pandemic is not yet over. You could still experience a drop in income if your hours are reduced, if you are quarantined, or if you have to stay home with your children because their school buildings are closed.

Ideally, you should have at least three to six months of living expenses in a savings account. If you’re not there yet, your third raise check is a good start. Online banks usually offer the highest interest rates on savings accounts, and some don’t require a minimum balance or monthly fee.

Contributions to a 529 Education Savings Plan grow tax-free, and withdrawals are not taxed if you use them for qualifying expenses, such as tuition, housing, and board. You can invest all or part of your third stimulus check – 529 plans usually have very low minimums. Additionally, your state may give you a tax deduction or credit if you invest in your own state plan. If your children are young, you have many years to invest in the plan in order to fund and grow. To search for plans, go to

Buy a gift card for a local restaurant or other small business that has been forced to close or downsize during the coronavirus pandemic. This will provide the business with much-needed cash during the shutdown, and you can use the gift card to treat yourself to a good meal or a massage when the pandemic is behind us.

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See some of our other third stimulus check covers:

  • Your third stimulation check: how much? When? And other FAQs
  • Who won’t get a third stimulation check (not everyone is eligible!)
  • How your third stimulus check will differ from the first two payments
  • Third stimulus check calculator
  • Is your stimulus check taxable?
  • Will Your Stimulus Check Increase Your Social Security Benefit Tax?
  • How Filling Out Your Tax Return Sooner (or Later) Could Boost Your Third Stimulus Check

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