In January 2025, the IRS will be sending the last checks from the 2020 stimulus payments to about one million people. Anyone who was eligible but for some reason has not yet received all three of the economic impact payments from the 2020 pandemic stimulus may automatically receive a check through direct deposit or by mail. This final stimulus check in 2025 is known as the recovery rebate credit.
The maximum amount that might be received by each person is $1,400. If you are one of the million people receiving a stimulus check in 2025, the question is: What will you do with it? When you come across a financial windfall, it’s important to make thoughtful decisions about how to use the money based on your personal financial goals. Should you save, spend, or invest your stimulus check?
We’ll walk you through how to make the best decision to improve your finances and establish a stronger financial future in 2025.
Here's what you need to know.
Should You Save, Spend, or Invest?
Payments like stimulus checks are known as “windfalls,” unexpected sums of money that go beyond your normal monthly income. Windfalls introduce the unique opportunity to get ahead of your financial plan with three potential options: save, spend, or invest.
Should you save the money and build your emergency fund/nest egg? Should you spend on something you’ve been wanting or needing? Or should you invest the money to grow slowly into greater funds in the future?
Let’s examine each option carefully.
When Saving Is the Best Option for Your 2025 Stimulus Check
Many people like the idea of tucking away their stimulus check – or any financial windfall – for a rainy day. If your monthly budget covers all your needs, then saving the money allows you to build your emergency fund and, in the right account, qualifies as a small investment.
Emergency Fund Priority
Building up an emergency fund in your savings account can be a literal lifesaver when unexpected expenses or income interruptions occur. The ideal emergency fund can cover 3-6 months of your living expenses, just in case. Whether you need to coast comfortably between jobs or cover emergency medical / repair expenses, the stimulus check can help to jumpstart or bolster your emergency fund for those potential “rainy days.”
Short-Term Goals
Many people are saving up for a specific short-term goal like an upcoming car repair, medical bills, or education expenses. The stimulus check can help you reach those goals much faster if you choose to save.
Who Should Save
Anyone who has very little to no savings or unstable income and is planning to save is different can benefit from saving their stimulus check for future expenses. Use it as a seed for your savings account and begin building that positive interest for long-term financial stability.
Strategic Spending for Immediate Needs
If you get a 2025 stimulus check, there are certain types of spending that can help stabilize your finances and build your financial future. For example, paying off debts quickly, covering essential expenses, or purchases that will increase your earning capabilities can make spending your stimulus check the right financial decision.
Paying Down Debt
If you are working on debt repayment, using your stimulus check to pay off high-interest debt like credit cards can help you save on months, if not years, worth of interest payments that you would otherwise have to pay. In this way, you can multiply the financial power of your windfall and jump ahead on your path to financial freedom.
Covering Essential Expenses
If you have looming essential expenses like overdue bills, rent, or groceries and are struggling to make ends meet, this is exactly what the stimulus checks were designed to help with. Quickly easing that financial burden can help you stabilize your finances and begin to get ahead.
Income Enhancing Purchases
Sometimes, a strategic purchase can help you boost your earning potential, like a downpayment on a car for commuting, a laptop for remote work, or a good interview outfit.
Who Should Spend
When is spending your stimulus check the right answer, and who should prioritize spending? Individuals and families facing urgent financial pressure will get the most benefit from strategic spending to ease financial stress and help get ahead in their finances.
Investing Your 2025 Stimulus Check for Long-Term Growth
Investing your 2025 stimulus check is a way to turn a relatively small amount of money into more income over time. You can build wealth and develop an investment portfolio that will create long-term financial stability.
Building Wealth Over Time
Consider investing your stimulus check in profitable stocks and mutual funds if you have an existing investment strategy that is ready to pursue. Or you can invest long-term by placing the windfall in a retirement account like an IRA where it will slowly accumulate and help with your retirement income many years in the future.
Invest in Your Career
Investments can also help you improve your earning potential beyond immediate spending. For example, you might invest in certifications and professional development courses or invest in starting your own side business so you can increase your long-term ability to earn money.
Who Should Invest
Those with already stable financial status and long-term goals will benefit the most from investing in stimulus checks rather than saving or strategic spending.
Combining Approaches for Your 2025 Stimulus Check
Of course, there’s no rule that says you can’t use multiple strategies by using the check in two or three different ways. Depending on the amount, you can save, spend, and/or invest using whatever ratio works best to meet your financial goals.
Split Your 2025 Stimulus Check
Divide your stimulus check funds between your savings account, immediate spending needs, and potential for investment. This will help you achieve a balance between both your immediate and short-term financial needs and your long-term financial goals.
For example, you might save 50% of the stimulus check, spend 30% on debt or essential payments, and invest 20% in your financial future.
Building Your Future With the 2025 Stimulus Check
If you are one of the million people receiving a stimulus check this January, this is a financial opportunity to plan for improvement in the short-term and long-term. Be sure to evaluate your personal financial circumstances, priorities, and plans before making your decision about what to do with the check. It’s important to make thoughtful decisions that will help you achieve your personal financial goals. Take small, intentional steps toward financial stability and your long-term financial growth. Use this opportunity to improve your financial future. Choose wisely and enjoy the positive outcomes.