INVESTMENT

How to spend your stimulus check


Has Congress passed?

Coronavirus Aid, Relief, and Economic Security (CARES) Act 2 Trump signed into law a huge $ 2 trillion stimulus package signed by President Trump on March 2, aimed at providing financial relief to individuals, families and businesses. * Like other stimulus packages, 2020 The stimulus package seeks to provide financial support through a variety of measures, including providing economic impact (i.e., stimulus checks or direct deposits to taxpayers).

Are you qualified, and how much can you expect to receive?

If you are a qualified single filer, you will receive a maximum stimulus amount ($ 1,200 and $ 500 for each child under 17) if your combined gross income (AGI) – your total income minus any authorized deduction at or below $ 75,000 If you file jointly, you will receive the maximum amount ($ 2,400 plus $ 500 per 17-year-old) if your AGI is 150,000 or less. , You will get a reduced stimulus amount.

The cost of your stimulus check is a bucket method

You don’t really need it Stimulated Economy with your check. Here’s what I’m telling my clients: No one has found it easy to make financial decisions since the outbreak. My best advice is: Do what you need to do to get a good night’s sleep. After all, health is equal to wealth. When clients seek advice on how to spend their share of the economic stimulus, I see buckets in their financial planning. (If you don’t have a plan or find yourself stuck with financial decisions, now may be a good time to ask for the advice you need.)

Cash

You’ve heard it before. Cash is king for meeting short-term savings goals. For example, if you haven’t already filed, you may need cash to pay your 2019 tax liability. If you take advantage of low-cost mortgage refinancing, you may need extra cash to cover closing costs. Protect yourself from an expense shock by saving at least $ 2,000 in cash – an unexpected one-time expense. Keep your cash in a safe place. Keep it liquid and control fees. Most importantly, learn how to access it when you have time. To some, this could mean cashing in on the security of an FDIC institution, which insures U.S. depository institutions against bank failure. For others looking for higher yields, mutual funds and other ultra-short-term investments in the money market may be an option, yet an option to keep liquid, cash. Be sure to refresh your usernames and passwords to make you feel confident and secure about your online account as well. If you are completing a chariot conversion or The back door Roth contributes, another reason to save a little more cash (beyond your target) is to help pay your income tax bill next year. Read 3 tax tips to consider in the current market for more information on tax-smart decision making. In addition to cash emergency funds, plan to easily access the cost of living for 3 to 6 months if you lose your income. Save more if your situation calls for extra liquidity depending on your costs and financial obligations. Read more about emergency funding.

O

If your debt levels continue to rise during this epidemic, you are not alone. It may be a good idea to reconsider your debt management strategy. If you’re struggling to hold your bills right now, try calling your mortgage, nding, utility, and even credit card companies to see if they’re offering any flexible payment options in response to the economic impact of Covid-1 of. Then I encourage you to set your budget. It can be tedious work, but adjusting to what is coming out is the opposite of what is coming Critical To understand your responsibilities. Maybe it’s time to consolidate your long-term ts (outstanding credit card debt, personal loans, etc.) and discuss low interest rates and payment schedules. I like to deal with debt Bucket With 1 of 2 broad strategies:

  1. Pay off your high interest loans first. Often credit card or student .n.
  2. Try the snowball effect. Whatever the interest rate, pay off your smallest debt first; Then pay the next one, and so on. This allows you to speed up the removal of liabilities from your balance sheet.

Invest

There are plenty of opportunities in this bucket. (This is talking about my favorite bucket!)

  • Invest in a nonretirement account. This can be an opportunity for you to start saving for an investment goal related to a retirement – including building liquid savings that you can easily access if you lose your income.
  • Turn it off in an IRA. As long as you have earned for 2019, you can contribute to the IRA until the new tax filing deadline of July 15, 2020. Has your contribution for 2019 already been the maximum? Start in 2020.
  • Fund your Health Savings Account (HSA). This can be a great time to contribute to retirement healthcare Book of War. Contact your HSA provider about your eligibility to contribute.
  • 529 Invest in the future education expenses of your children or grandchildren by contributing to the savings plan.
  • Take advantage of compulsory family time to invest by opening a Juvenile Law (UTMA) account from a single transfer to your child, grandson or minor. Share your knowledge and involve them in the process – contributing, tracking performance, understanding risk, etc. Once you’ve shared your investment knowledge, see what they can share with you. (Maybe you can get a free lesson or 2 using the wide array of apps available on your computer or smartphone.)

Donate

If you are interested in donating to charity during this time, here are a few things to keep in mind. If you plan to take a standard deduction in your 2020 tax return, the Cares Act provides for a new line exemption of above00 dollars. Every bit is calculated right now, and even if it’s not a storm, if you’re in the 22% tax bracket, you can save $ 66 in taxes if you make a full cut. To a charity of your choice. If you itemize, the IRS has temporarily revoked the AGI limit on cash grants. (After the Tax Cuts and Jobs Act (TCJA) was passed in 2017, the AGI limit for cash donations was 60% to give cash gifts to friends or family members. More specifically, a young investor (such as a child or grandson) who Struggling to fill buckets of money and / or debt – at the expense of their other buckets, Investment Excluding the annual gift tax of বাল 15,000 per bucket, you can subsidize their IRA contributions. As long as they have earned, it is a win-win. They will thank you year after year for the increase in tax benefits.

The latest thought

Balance is the key to life. For some, a stimulus check can mean new things. For others, it may already be spent. If you have a bucket covered, do something for yourself that can benefit others. For example, support small businesses by booking an online culinary class or ordering a takeout from your favorite restaurant. Create a garden and donate crops to your local food shelves. Or start a home improvement project you or your spouse wanted to check the list. Invest in a new or existing hobby. Travel when the time is right. We’re in unfamiliar territory right now – but it won’t last forever. If you get a stimulus check and you don’t need it to cover short-term costs, think long-term. And stay healthy.

* Source: US Treasury Department

** Source: IRS

Comments:

All investments are at risk, including the potential loss of money you invest.

We recommend that you consult a tax or financial advisor about your personal situation.

Counseling services are provided by Vanguard Advisors, Inc., a registered investment advisor, or Vanguard National Trust Company, a federally chartered, limited purpose trust company.





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