Why you might treat your third stimulus check differently

Immediate needs come first, then savings. Consider gifts to those in need and teaching your children about money.

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Blank checks sit on an idle press at the Philadelphia Regional Financial Center, which disburses payments, such as stimulus checks, on behalf of federal agencies.

Blank checks sit on an idle press at the Philadelphia Regional Financial Center, which disburses payments, such as stimulus checks, on behalf of federal agencies.


Congress has passed the third stimulus check relief package, and President Joe Biden promptly signed it into law.

Here are the details of the American Rescue Plan Act of 2021, plus an actionable priority list of the best ways to use the money based on your current financial circumstances.

  • The government will issue $1,400 relief checks (actually a rebate on income taxes) to individuals — $2,800 for joint tax returns — plus $1,400 multiplied by the number of dependents. An average family of four will receive $5,600.
  • Each recipient generally needs a Social Security number.
  • Payments decrease beginning at adjusted gross incomes over $75,000 for individuals (no payments for those with incomes above $80,000) and $150,000 for joint filers or a surviving spouse (no payments for those with incomes above $160,000).
  • Incomes are based on your most recently filed tax return.

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When will you receive your stimulus payment?

Payments have begun to be issued. To track the progress of yours, check the IRS’ Get My Payment search tool. By entering your Social Security number, date of birth and address into the online tool, you’ll find out when and how (by mail or direct deposit) you can expect your payment.

How to spend yours wisely

There can be a huge temptation to see the check as bonus money that we can simply spend, says Michael H. Baker, a certified financial planner with Vertex Capital Advisors in Fort Mill, South Carolina.

“But let’s be prudent. Maybe the best thing for you to do is to replenish your emergency fund,” he says. “Maybe you need to pay down that credit card that you’ve been using to bridge yourself through inconsistent income.”

For those who are struggling financially, the first thing to do is cover the basics. For others who have been less affected economically, the extra money can be put to other uses. Here’s a list of priorities to consider:

  • The best use is for urgent needs: food, late rent or mortgage payments, or overdue utility bills.
  • Build a cash cushion for necessities, perhaps for the rising cost of groceries and gas.
  • If your situation isn’t critical, replenish emergency savings. Aim for at least six months of basic living expenses.
  • Pay off high-interest credit cards.
  • Add to midterm savings, such as a high-interest savings account. Build a near-cash fortress to protect yourself from another downturn.
  • Consider investing to fortify long-term savings.
  • If all else is good, consider donations to help those in need.

What not to do with your check

Baker believes people’s biggest mistake with such windfalls is investing the money before savings goals are met. Investments are typically best for longer time horizons, and too often, new investors are tempted to make withdrawals from investment holdings when “life happens,” he says.

And don’t make a hasty decision or a large impulse buy, says Marguerita M. Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.

“People don’t need to rush and spend it,” she says. There’s nothing wrong with taking your time and thinking about the best way to use the money. “It’s OK to have a little fun today, but also plan for your future.”

For some, third check brings new possibilities

For some families, this third check may offer a couple of unique possibilities. That’s especially true for those who are in a better financial position now than they were when the first check arrived.

“This is an opportunity for them to be generous,” Baker says. “They probably know some people that have been hit hard.” Reaching out to neighbors with an offer of financial support — perhaps gas or grocery gift cards — may be the best use of some of the windfall.

“You can consider supporting a community-based organization,” Cheng says. Rather than a large financial or time commitment, “it could be something as simple as donating diapers.”

The “found money” can also be a teachable moment for your children, Baker says. Some of the $1,400 allocated to each dependent could be given to them as a lesson on spending — and saving a portion of — the sum.

Of course, many of us will decide to use the windfall to fund a long-delayed vacation or apply it to a larger purchase or treat. After all, spending the money is what the government wants us to do, Baker says.

“Don’t feel guilty about that, if you’ve got the fundamental stuff taken care of,” he adds.

Hal Bundrick is a personal finance writer and a NerdWallet authority in money matters. He is a certified financial planner and former financial advisor. The article originally appeared on NerdWallet.

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