This week, the IRS started depositing stimulus relief payments as part of the federal government response to the coronavirus pandemic. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides eligible Americans with up to $1,200 in direct payments to combat the impact of COVID-19. 

The relief comes as a record number of Americans file for unemployment, and there is uncertainty over when the government will ‘reopen’ the economy. While $1,200 can only go so far during a time like this, every bit helps. Here are a few ways you can make the most of your stimulus payment, depending on your current financial situation. 

How to use the money

1. Cover essential expenses for you or a loved one

First and foremost, if you find yourself in a position where you are living paycheck to paycheck or have recently experienced income loss, use your stimulus check to cover bills you must pay, like rent and utilities, as well as fluctuating costs, like groceries and necessary transportation. 

Keep in mind that you may be able to find ways to save money on necessary expenses during this time. Your landlord or mortgage lender may be willing to negotiate a payment plan, or refinance your mortgage, and many utility providers have programs for low-income or unemployed residents. 

For more tips on how to save on essentials, take a look at our advice for creating a realistic spending plan. 

2. Build up your emergency savings

During a time like this, having a solid level of savings can help you maintain peace of mind. As a general rule of thumb, you should work to save three to six months of necessary living expenses in an easy-to-access emergency fund. 

If you are able to afford your current expenses, and do not have an emergency fund set up, consider using your stimulus check to kick-start your savings. If you are still employed, you may want to set-up a small recurring transfer to your emergency fund as well.

3. Pay off your highest interest debts

If your bills are up-to-date and you believe your income is safe, focus on paying down any high-interest debt, like credit card balances or payday loans. 

38% of working Americans report consistently carrying credit card balances over to the next month. If you find yourself in the position to be able to use your stimulus payment to pay-down your debt, doing so will greatly improve your financial health. 

4. Invest in your financial future

If you have a solid financial foundation, you may want to use your stimulus payment to take steps towards achieving your longer-term financial goals. Contributing to a retirement account — 401(k) through your employer, a traditional IRA (individual retirement arrangement), a Roth IRA or another account with potential tax advantages — can help jumpstart your future financial health.

You could also put the money towards an online class, membership to a professional organization, or continuing education expenses. Not only are these fulfilling ways to spend any extra time you may have while staying at home, but they may help you succeed at work as well. 

5. Support your community

If you have no debt and a full emergency fund, you are very fortunate during these times. Consider supporting small businesses in your community who may be closed or struggling during this time. Buying gift cards, continuing memberships to locally owned businesses, or donating to a relief fund for employees of small businesses in your area are all ways to put your stimulus payment to good use. 

There are also many local and national coronavirus-focused charities looking for donations. The New York Times put together a list of charitable organizations that are directly helping the coronavirus relief effort, such as those who are providing food or helping with medical efforts.