6 Ways To Spend Your Third Stimulus Check

After a year of COVID shutdowns and restrictions leading to a general economic slowdown and unemployment for many Americans, the government is making an effort to jumpstart the economy by distributing a third stimulus check to American families, this time even larger than before. The goal? Help people get back on their financial feet and, ideally, spending a little as coronavirus restrictions wind down and vaccines become widely distributed.

Many Americans will receive a $1,400 check soon, once President Biden signs the third stimulus package. A bit of thought needs to go into how you spend that money so there are no regrets. We have some ideas for you below.

In this article

    How do people say they will spend their third stimulus check?

    For many families, this stimulus money is a powerful financial boon. What do Americans plan to do with this money?

    According to a survey at Bloomberg, the most common responses to the question of how people intend to use this stimulus money are savings and basic needs like food and housing. In fact, those were the top three responses: savings, food, and housing.

    This provides some insight into the financial reality of the last year for many Americans. Many families were faced with losing a loved one and, in many cases, that loved one was an important income earner. Many more families faced job loss due to economic uncertainty, extended illnesses and other financial troubles.

    Priorities for your stimulus check

    Given that picture, what are some priorities for spending your stimulus check? Building on advice from the first two stimulus checks, here are six things you should consider.

    Emergency fund

    An emergency fund is simply a pool of money set aside for unexpected events, such as a job loss, an unexpected passing, a major car repair, an emergency appliance replacement and so on. Starting an emergency fund is easy, particularly if you have money to start with.

    For many Americans, 2020 was a stark lesson in the value of having an emergency fund, as many families were hit with unexpected job losses and deaths, putting them in a tough financial situation. Using some of or even all of your stimulus check to provide an emergency fund is a wise financial move.

    Pros: An emergency fund gets you ready for the next emergency, and it gives you flexibility to change your mind later
    Cons: It doesn’t offer a great return on your money

    2020 tax bill

    Many Americans are discovering that the challenges of 2020 may have brought unexpected tax implications. For some, this comes in the form of unemployment. If you received unemployment but didn’t elect to have taxes withheld from it, you may be facing a nasty tax bill. For others, this may come as a result of unexpected freelance work or gig economy work, where they received a 1099 for their efforts and learned that their employer did not withhold taxes for them. In both cases, a tax bill may be sitting there waiting for you, and the stimulus check may just help you pay it off.

    Pros: It keeps the IRS off your back; unpaid taxes can have legal complications and can damage your credit
    Cons: It can feel like the government is giving you money just to take it away again

    High interest debt repayment

    According to CNBC, 51 million Americans increased their credit card debt because of COVID. That’s a lot of people out there facing additional credit card debt. With credit card interest rates commonly as high as 30% annually, that credit card debt snowballs quickly into an overwhelming amount. Using your stimulus money to get that credit card debt under control using a simple debt repayment plan can put you in a much better financial place.

    Pros: Probably the most beneficial to your net worth; eliminates monthly bills
    Cons: You’re not gaining assets, merely losing debts


    If you have an emergency fund and don’t have any high interest debts, another option for your stimulus check is to invest it. For example, if you want to save for retirement, you may want to put that check into a Roth IRA, and if you don’t have one, starting a Roth IRA is simple. If you’re saving for a child’s college education, consider putting money into a 529 college savings plan for them, another move that’s simple to get started. Even if you’re saving for something like a house down payment or a car, putting money somewhere secure for the next year or two is a simple way to invest.

    Pros: Great way to build wealth; moves you toward big life goals
    Cons: Puts money at risk; should be secondary after paying off high interest debts

    Home refurbishment and appliance cycling

    Another good option for stimulus money is to put it toward home improvements. Many households (ours included) have put their appliances and other aspects of their home to heavy use over the past year by staying at home much more often than before. This might mean that some of your appliances and other aspects of your home are simply worn out and due for replacement.

    Pros: Replacing an ailing or broken appliance can be a major quality of life improvement
    Cons: It’s not particularly exciting

    Travel and fun

    A final option is to just have fun with the money. Use it for a trip, or to buy something you’ve been wanting for a while. While this might not be the best financial choice for the money, if you’ve been financially lean for a long while, this might be a great opportunity to splurge a little. You might consider splitting the money as well, using some of it for investing and another portion for a family trip, for example.

    Pros: It’s fun; it can feel like a reward after a long period of belt-tightening
    Cons: It won’t improve your financial situation

    We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Trent Hamm

    Founder & Columnist

    Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.