It has been a month or so since the US started sending out their Coronavirus stimulus checks. While not everyone has gotten theirs, a good portion of you have one in your account right now. Now, many people have breathed a sigh of relief, as they needed that money to keep their family afloat. For them, there isn’t much of a choice on the table to save or spend. For many others, though, there is a tough decision at hand. The government has stated that stimulus checks are typically just that: A way to get money back into the economy. This implies that they want the money to be spent. EYF readers are probably conflicted, as we talk your ear off about saving all the time. So, what should you do with your stimulus check?
In Favor of Spending
The government’s primary argument in regard to stimulus money is for it to be spent. This is for a good reason, as stimulus checks are usually distributed to kickstart a stagnant economy. Within the scope of the COVID-19 pandemic, closures of businesses have left many out of work. Discretionary spending has taken a hit for many Americans for this reason. When spending goes down, economic growth takes a halt. So, from a macroeconomic perspective, spending the money will assist the US as a whole by bringing more money into the economy. Spending locally can be a huge help to small businesses, and the impact can keep them afloat. There also exists a level of personal benefit for you, as getting new stuff is always a bonus. For these reasons, spending the money is a pretty easy sell.
In Favor of Saving
This one will sound pretty familiar. Regardless, it is important to speak about it in the context of this pandemic. Coronavirus has exposed many underlying issues in the American economy. It has showed that the government can and will use their power to manually bring a halt to economic progress in times of emergency. Also, it has showed that small businesses still take a backseat to large corporations. It has showed just how delicate the unemployment system is, and who it leaves out. These are just a few of the many reasons it is always important to have a few months’ worth of expenses saved up in your bank account.
What Should You Do?
Now that we have laid out the benefits of both options, it is time for the answer you are searching for. when it comes to your personal situation, you should ask yourself: Do I have 3-4 months’ worth of expenses saved? If you don’t, that should probably be your first priority. Unless you have something you absolutely need, like transport to work, make sure you have that safety net for times just like these. If you already have that taken care of, you should probably spend at least some of the money. I know it is surprising to hear from us, but the macroeconomics are important here. Your local businesses need people to spend money, and you may even need some things to keep you busy during this time. So, do what is best for you, and make sure you are keeping yourself prepared for the future!