Student Guide to Stimulus Payments: Everything You Should Know
Stimulus payments are still making their way across the country, and lawmakers are already showing a preference for a fourth wave to come. While that isn’t something you can take to the bank just yet, you should be cognizant of when these payments are coming, what they are for, and how you should be using them.
In the following article, we will be covering everything stimulus-related as it pertains to college students who are expecting them in their bank accounts (and those of you who have already received them). Let’s begin!
How Stimulus Payments Are Dispersed
If you earned income in 2019 or 2020, you will be eligible for a one-time stimulus payment from the Internal Revenue Service (IRS) straight out of the gate. The IRS will deposit a payment of up to $1,400 for individuals and up to $2,800 for married couples without children.
If you’re a college student, the Biden administration has determined that you can receive a stimulus payment. This is regardless of other non-loan funding you received in the previous year. If you’re eligible, and most full-time students are, you should be receiving your stimulus payment any day now if you haven’t already. The easiest methods of getting your stimulus payment will be through check or direct deposit.
How Can Students Get Their Stimulus Payments
This is not the first time the IRS has dispersed stimulus payments. In 2009, they did as well. Even as the IRS workload has backed up during the pandemic, it is still moving more efficiently than in previous years, including with the stimulus response of 2020.
Have you received a direct deposit tax refund to your bank account recently? If so, the chances are good you won’t have to do anything at all to ensure that you get your current payment. The $1.9 trillion stimulus payment means your $1,400 should be showing up any day now in your bank account. If you are still being claimed by your parents, it will likely go to their bank account as part of a lump sum payment.
Just multiply $1,400 by the number of people in your family to determine how much money that will be. Hopefully, your situation is good enough between you and your parents that they will provide you with your share no questions asked.
How Students Should Approach Stimulus Payments
Once you receive stimulus payments, it is time to determine the best ways to use them. Look at your current financial situation. How are you set up for income and expenses? Are you ahead of the game or falling behind? Once you determine your needs, here are some suggestions.
Pay Down Debts
Stimulus payments are a great way to pay down debts. You incur interest rates every time you take on a credit card payment or student loan. Since the Biden administration has not placed any special circumstances on how you use these payments — unlike the 2008-2009 stimulus payments — you can apply your payment directly to any debts that you might have outstanding. This way, you’ll save money on interest and accelerate your debt pay-down.
Buy More Goods and Services
Popular opinion might tell you to save your stimulus payments, but this can be limited in thinking. Making a purchase that spurs the economy is never a bad thing and can actually be a great way to get hiring started back up. That hiring could mean a future part-time job that helps you earn even more money beyond the one-time stimulus payment.
Additionally, hiring out services that you need can free you up to focus more on your studies or side hustles. The key is to not be short-sighted in how you approach what you do with your stimulus.
Many people think that they can create a passive income by investing time, but that’s not the case. The only way to create a passive income is to invest your money in something that makes money for you. The earlier you can start investing, the better. Then you can sit back and see your money grow over time.
Investing money in a business venture or financial instrument (i.e., stocks, bonds, mutual funds, cryptocurrencies) is always a risk. However, there are ways to mitigate that risk. Diversify your holdings over investments that are both speculative and proven. That way, when you take a hit in one area, you won’t lose everything.
Getting a stimulus payment is a good time to think about starting your nest egg. Keep adding to it over time, and you will be well on your way to retirement, especially as you graduate and join the workforce. Just make sure you’re always contributing.
Future Stimulus Payments Availability
The last thing you need to remember about this current batch of stimulus payments is that they could be the last ones you receive for quite some time. There are rumblings of a fourth payment on the way, but the last one was limited in who qualified. Any future payments will probably face further limitations.
While college students are the most strapped financially and thus likely to receive a future distribution, that’s not something that can be counted on. Therefore, it’s important to be strategic with what you have now (or what will soon be coming your way).
Stimulus Payments Can Help You Get Ahead During Hard Times
Stimulus payments can certainly offer some relief as you gear up for the year ahead, but they’re not to be counted on in the longer term. That said, they offer welcome relief to those of you who’ve wondered how you were going to get through this last part of the pandemic.
If you have yet to receive your stimulus payments, refer to the guide above for how and when you can expect those to come your way. If you have received yours, follow our advice on how to use them, provided that you haven’t used them already. Good luck as you decide your next moves! And while you’re at it, let us know how you decide to use yours once the money is in hand by dropping us a line in the comments section below.
[Featured Image by Madill Record]