Spend It or Save It? Financial Advice For Your $1,400 Stimulus Check

The third round of U.S. stimulus payments is well on its way out the door, just days after President Joe Biden signed his $1.9 trillion stimulus bill into law. For some, the question now is what to do with the money.

The $1,400 checks are coming at a complex time for many Americans. Millions are still unemployed and in desperate need of the cash, which comes in addition to unemployment support. But the economy is recovering, and 21% of the population has received at least one vaccine shot. Some are back at work or planning a return to the office soon.

Does an economy on the mend mean it’s safe to spend or make bets on the market? Should some be put in savings, and if so, how much? What about charitable giving? Or should it be put back into the local economy, spent at neighborhood stores?

Advisers say it doesn’t have to be an either-or situation. “You save some, you give some and you spend the rest,” said Scott Cole, president of Cole Financial Planning and Wealth Management in Birmingham, Alabama. “You could say, ‘I would like to pay down some debt, stick a little in my cash reserve and still have a little bit to do some fractional trading,’ if you want to.”

More than a third of Americans indicated they would save a significant amount if they were to receive a stimulus check, according to a survey by Morning Consult commissioned by Bloomberg News. Meanwhile, about half of people who already invest between the ages of 25 and 34 plan to put 50% of their stimulus funds into the market, according to a survey by Deutsche Bank that polled more than 400 investors with brokerage accounts.

For years, we’ve been asking investment advisers their thoughts on where to invest $10,000 and publishing their picks quarterly. We’ve also asked where to invest $1 million. This time, we thought we’d ask where to invest $1,400.

Most advisers wanted to be very clear. The first thing you should ask yourself: Can you afford to lose the money? Do you have enough in an emergency fund? What level of risk are you willing to take — and should you take?

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