Cities and towns across America have looked a little different over the past year as the coronavirus pandemic has changed our way of life. In the middle of this gloomy crisis, though, we’ve seen so many examples of human kindness at its finest. Individuals and businesses are finding creative ways to give back to medical workers, food pantries, and their communities. And now, some additional financial help is on the way too.
In March 2021, Congress passed the American Rescue Plan Act of 20211,2 to provide a third round of financial relief to individuals, families, and businesses who have been impacted by the coronavirus pandemic. As a result of this Act, many Americans will start to see stimulus checks in the mail or direct deposited to their accounts in the coming weeks (depending on eligibility).
If you think you’re eligible for this payment, how do you plan to make the most of this money? Check out this simple step-by-step guide to make these extra funds work in your favor.
Update Your Budget
Any time you have extra money come in, look at your budget first. Doing this will help you plan where it would be best to use the unplanned income. What bills do you need to catch up on? Have you added anything to your savings lately? If you haven’t created a budget yet, get started with our budgeting worksheet.
Take Care Of Basic Needs
When we get extra cash, it’s tempting to spend it right away on a treat or bills. Before you worry about your bills, take care of any basic needs for you and your family first. Stock up and make sure the family meals are taken care of first. Then focus on the roof over your head. Catch up on utility bills and make sure your mortgage payments are current. If your stimulus check isn’t enough to take care of your mortgage, contact your lender to see if they’ll work with you on a payment plan.
Catch Up On Bills
Review any past due bills and prioritize them by importance or balance due. If you don’t think that you’ll be able to catch up on every bill, contact your debt providers. Many organizations are waiving late fees, offering assistance, or allowing an extended grace period on payments right now. For example, we’re currently waiving the $5 transfer fee from savings/line of credit accounts, removed the limit on electronic transfers from savings and money market accounts, and we offer Skip-A-Pay for some loan payments.
In addition, federal student loan payments are suspended until September 2021.
If you’re not sure if your loan qualifies for a special program, contact the company or institution that holds your loan or bill. These special programs may make it possible for you to catch up on one bill without having to worry about another bill.
If all of your bills are current, consider catching up on credit card payments or paying down the balance on high-interest loans. Still in good shape? Let’s talk about your emergency fund.
Start Or Add To Your Emergency Fund
Your budget is in a good place, your basic needs are taken care of, and your bills are current. You’re in a good place right now, but are you prepared for the future? The last Federal Reserve report on the economic well-being of US households found that 37 percent of adults would not be able to cover a $400 emergency with cash and would need to find another way to pay for the expense.3 Now would be a great time to establish or add to your emergency fund.
Most experts agree that you should have enough saved to cover 3-6 months of expenses. Use your budget to figure out how much you spend each month. Multiply your expense total by three to get an idea of how much you should have saved. Make sure your emergency fund is saved in an account that’s easily accessible (like a Special Savings Account) so you can get to it if you need it.
Support Local Businesses
The economic effects of the pandemic have impacted nearly every business in America. So, the Michigan Economic Development Corporation is taking steps to offer grants and resources to help support small businesses1,4 in our state. However, grant funding can take a while to process and distribute. So, it's important to support small businesses now.
If you’ve gone through the steps above and have money left over, consider supporting local businesses who have been impacted by this situation. Many places are asking patrons to purchase gift cards, order takeout, or place orders online.
Here To Help
With so much uncertainty in the world, you might be a little confused about how to plan for what’s next. Just remember that we’re here to help you in any way that we can. The Lake Trust Financial Life Planning team can help you create a budget or figure out a plan for the future. Our partners at GreenPath Financial Wellness1 can also help assess your financial situation.
Keep your head up. Good times will be here again before you know it.