Money Experts Explain What To Do With That Stimulus Check In Your Direct Deposit

A month into social distancing measures, most people are trying to understand the full scope of how the coronavirus pandemic will impact their lives. As state and local governments order people to stay home, many of us have shifted to work from home indefinitely, continued positions on the front lines, or lost jobs altogether. As a result, the economy has thrown retirement savings and other investments for a loop.

These changes, like any issue related to the gender pay gap, disproportionately affect women, who make up 75% of health care practitioners, almost 90% of health care support staff and one-third of independent contractors, according to the Bureau of Labor Statistics. More than 700,000 jobs were eliminated during the first wave of coronavirus-related layoffs in March, NPR reported, 60% of which were held by women; a recent report from the National Women’s Law Center found that women, especially Latinx, black, and indigenous women, are overrepresented in low-wage jobs and will be hit hardest by a post-COVID-19 recession. Women who are still employed might need to juggle new responsibilities like caring for children who are now learning remotely or for sick relatives alongside, you know, doing their jobs.

Financially speaking, it’s a tough time for everybody. Bustle spoke with economics and personal finance experts about what you should be doing with your money right now.

Plan How You'll Use Your Stimulus Check

The stimulus package signed at the end of March is meant to offset some of the losses from the shaky economy. Single individuals who made less than $75,000 in 2018 will get $1,200, plus $500 per child. People making up to $99,000 and married couples who filed jointly might get slightly different amounts.

Yana Rodgers, faculty director for the Center for Women and Work at Rutgers University, says the package is “a step in the right direction but … insufficient” — not enough people qualify for stimulus checks, the checks won’t come quickly enough, and $1,200 isn’t really enough to sustain a household through this crisis.

Ande Frazier, a certified financial planner and CEO and editor-in-chief of MyWorth, a personal finance site, suggests using this money to cover immediate needs or boost your emergency fund. Lauren Anastasio, a certified financial planner at SoFi, a personal finance company, says that your emergency fund should consist of three to six months’ worth of essential living expenses; if you’re wondering what that number is, calculate everything you spend money on in a month and multiply that by at least three. If you don’t already have a budget, that would be a good project to take on now, too.

If you’re strapped for cash, plan to be “ruthless” with your spending for the next few months, Frazier says. Write down how much money is coming in and out, when your bills are due, and what you can cut. If you’re working from home, your transportation costs will likely be lower or nonexistent; if you take money out of your paycheck pre-tax for subway tickets or parking, ask HR if you can pause that deduction for now. You can also cut back on food expenses by meal prepping, Frazier says.

The package will also expand unemployment benefits; you can receive an additional $600 a week through the end of July and can get benefits for up to 39 weeks rather than the usual 26. If you’ve lost your job or been furloughed because of coronavirus, you can go to your state’s department of labor and see what you’re eligible for.

If you’re totally secure in your emergency fund and want to use the extra money to help others out, Frazier recommends donating it to domestic violence organizations or another cause close to your heart.

Call Your Bill Collectors About Coronavirus Relief

If the pandemic means you can’t cover your heat or electric costs, call your lenders to adjust or defer your repayment plans, Anastasio says. If you specify that you’ve been impacted by coronavirus-related job cuts, they may offer programs that will prevent your accounts from being reported to credit bureaus for late or missing payments.

Under the new stimulus package, federal student loan payments will be suspended until Sept. 30, according to The New York Times, so that’s one bill people won’t have to worry about; Frazier recommends putting the money you’d spend on paying off loans directly into savings if you don’t need it right away.

Frazier has been advising her clients to pay the minimum on their debts and concentrate on stashing as much money as possible in their emergency funds. If you want to continue paying off your debts during this period, try the avalanche method, or paying the minimum across all your debt and use the money left over to pay off anything high interest. If your debt feels overwhelming, try the snowball repayment method, meaning you pay off your smaller debts before moving onto the bigger ones.

Leave Your Retirement Savings Alone… Unless You Really, Really Need It

It might be tempting, but pulling money from your retirement probably isn’t worth it, unless your situation is truly drastic. Instead, Frazier recommends waiting out the market downturn.

“I know that this is very uncomfortable, but it truly is a natural part of the market cycle,” Anastasio says. “And for those younger investors who are experiencing this for the first time and watching their portfolio go down ... this is not the first time they’re going to experience this during their career.”

Frazier recommends looking at your savings, the cash value of your life insurance policy, or even a home equity loan instead.

If you absolutely need to withdraw from your retirement savings, you can take out up to $100,000 from your 401(k) or IRA without being hit with a 10% penalty, thanks to the stimulus package, but you’ll still have to pay regular income tax on it, Frazier says.

“Taking money from your retirement funds probably should be a last resort,” she says.

Don’t Panic Invest During The Stock Market Downturn

You might have heard that with the downturn, it’s like stocks are “on sale.” Anastasio has heard of inexperienced investors who are borrowing money or even using their emergency funds to invest in stocks at a lower price, but she says it’s not a great idea to withdraw from an emergency fund for anything other than an emergency.

Most people shouldn’t make any changes to their investment strategy right now, Anastasio says. She says she’d rather see her clients focus on building a cash reserve — that three to six months’ worth of expenses — than trying to make short-term gains on the stock market. Ideally, you want to have those savings and your high-interest debt paid off before doing any kind of investing, she says. That way, you’ll be prepared to take care of yourself if you’re laid off or furloughed or if you get sick.

If your savings are in good shape and you’re itching to get into the market, talk to a financial advisor to make sure you’re making the best use of your money. But remember that no one is sure how long these ups and downs will last, and the stock market will still be there when this is all over.