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Expert says you should save stimulus money if you don't have rainy day fund

How to get your stimulus check faster
Posted at 2:49 PM, Apr 16, 2020
and last updated 2020-04-19 15:07:52-04

INDIANAPOLIS — While you may be tempted to spend your stimulus check on something fun like new clothes or remodeling your home, experts say you should only spend it if you already have a rainy day fund in place.

Chase Haller, an attorney with the Neighborhood Christian Legal Clinic in Indianapolis, said many Hoosiers may not realize they still need to pay their bills—especially their rent and mortgage.

"There's a misconception that means people don't have to pay, and that's not the case," said Haller. "People still do owe their lenders and landlords their rent; it just means their landlord may not have the same remedy until the moratorium ends on May 5."

Haller recommends using the stimulus money to pay your bills and create a cushion of savings you can use during an emergency, such as a job loss or illness.

"A minimum of two months of necessary expenses and in an ideal situation up to six months," said Haller "It can feel very intimidating to save that money in cash, but it's certainly necessary to weather a situation like this where you may not be able to find employment and your unemployment benefits may not last you the time you're without a job."

Even families who are in better financial shape can save the money for retirement or their child's education.

Of course, using your stimulus check to pay bills or put in your savings isn't nearly as fun as spending it.

"It goes against our culture to set this money aside and say hey we need to set this money aside for a rainy day," said Haller. "Most people's inclination is to see what I can spend it on, what have I been lusting after at the store, but I think you have to refocus your mind on protecting yourself and your family, and the best way you can do that is by planning appropriately."

Haller recommends creating an "essentials only" budget so you will know what to cut if there's an emergency, such as losing your job.