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Four ways to spend your stimulus check

Feb 25, 2021
Empower Insights

Put the money where it can do the most good

Whether you are in financial straits or not, your next COVID-19 relief check can improve your financial situation. The trick is deciding how to spend your stimulus money. Consider using the following list of priorities to guide your decision-making.    

1. Pay any past-due bills

If you’re behind on any major bills — utilities, rent or mortgage payments — you probably want to start there. Because past-due bills can incur late fees and even restrict access to your home and/or necessary utilities, they should typically be paid first.

If you have more than one overdue account, you will likely need to do some research to decide which bill is the priority. Here are some factors to consider:

  • You may qualify for state-administered housing and/or utility assistance. To learn more, visit your state government’s website.   
  • If the property you live in is financed by the government, you may have additional options — even if you’re not the homeowner. Learn more at
  • Federally backed student loans offer generous protections for borrowers. Contact your loan servicer to see whether you qualify for reduced or deferred payments.

Once you’ve determined what assistance you’re eligible for, you can use your stimulus check to pay the highest-priority bills.

2. Pay down high-interest debt

The next major category that deserves attention is your high-interest debt, such as a personal loan or a credit card. These debts can cancel out your efforts to save, because the interest you owe on them will accrue faster than the interest you earn from your savings. Any extra money you pay toward your high-interest debts helps you take control of your finances and boosts your ability to save. 

3. Build your emergency fund

An emergency fund is essential to financial stability. Having cash set aside to cover unforeseen expenses can help you keep from taking on new debt when the roof leaks or your car breaks down. If you don’t have an emergency fund, consider using your stimulus check to start one — setting even a few hundred dollars aside is a great way to start building up a cushion. If you already have some emergency savings, keep adding to that account until you have enough to cover three to six months’ worth of expenses.

4. Save for retirement

If your basic finances are sound, one of the best things you can do with your stimulus check — or any windfall — is to put it in your retirement savings. Contributing to your retirement savings now gives your money potential to grow until you need to withdraw it in retirement: Any investment returns you earn can go on to produce returns of their own over time. And if your employer matches your contributions, that can give your savings another boost.

Gain control of your financial future with an Empower Investment Account.

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