Stimulus could help financial future


JASPER — Many Americans received their third stimulus check this month as part of the American Rescue Plan, which aims to speed up economic recovery and help those who may be struggling financially during the COVID-19 pandemic.

More than 127 million third stimulus payments have been distributed as of Monday, and several million more will be sent soon. Many are relying on the money to pay essential bills such as rent and utilities, make essential purchases such as groceries and pay off debts such as student loans.

But for some, the payments are opportunities to branch out and use the money in ways they haven’t been able to in the past year during the pandemic.

Jennifer Wilkerson, an Ameriprise financial advisor in Jasper, said people who have leftover stimulus money after making necessary payments should use it to contribute to an emergency fund. An emergency fund is a safety net to use for unexpected events such as illness, home repairs or job loss.

Wilkerson, like most financial advisors, said she recommends saving enough money to cover three to six months of normal living expenses in an emergency fund. For people who can afford it or especially for people who are thinking about switching jobs and may have to live without a paycheck for a while, six months’ worth of expenses is recommended.

“Some people have jobs that finding a specialty maybe could take a little longer, and those types of folks want to have a little more in there,” Wilkerson said. “But if someone has a job that they can transition to something else fairly quickly, then they may be able to get away with closer to three months.”

In addition to an emergency fund, Wilkerson suggested putting some of the money toward a 529 plan, which saves money for college and other education expenses.

On the other hand, some people may want to invest the money for themselves, Wilkerson said, including those who have never invested before. Although Wilkerson encouraged first-time investors to meet with a financial advisor, there are options online to do it themselves.

“For some folks, it might be a good contribution to an IRA to a Roth IRA, or just mutual funds in general to be an extension of an emergency fund,” she said. “But certainly there are a lot of possible good ideas that they could apply this toward.”

Of course, many will likely want to use at least some of any leftover money for personal purchases, such as a vacation or some new clothing or technology.

In general, Wilkerson recommended saving most of any leftover funds but said she understands that people have had an especially stressful year and may want to treat themselves. In that case, it may be a good idea to first look at purchases that will be helpful in the long term, such as upgrading an outdated laptop or getting a car tuneup, and budgeting the money before spending it, she said.

“It’s always tempting to do upgrades or buy things that you have wanted, and I’m not going to tell people not to do that, but give yourself a budget,” she said. “Maybe you say, ‘I’m going to put this much toward saving for those essential expenses … but I’m going to allow myself to spend, you know, $200 or $500 or whatever that amount is.’ ”

Even if the purchases themselves don’t last, it can be nice to make memories that will, Wilkerson said.

“So maybe your family can go somewhere together, and it doesn’t have to be an expensive trip. Maybe it’s a little trip to the zoo or something,” she said. “It’s probably not something you could go take a lavish vacation with, but if it gives you a little bit extra to go do something and make some memories with your family or just destress, then I think that can be reasonable. It’s a good thing to do and it certainly will help spur the economy, which was part of the intent of putting money in people’s hands, as well.”

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