How to Use Your CARES Act Relief Check Wisely

The Coronavirus Aid, Relief, and Economic Security Act (or “CARES Act”) is the name of the stimulus package that was recently passed and signed into law in the United States. Its purpose is to provide financial assistance to those who may be affected or struggling due to the COVID-19 pandemic. Not only does it cover sectors such as small business, education and health care, but it covers individuals.


Who is eligible? 

U.S. residents will receive the Economic Impact Payment of $1,200 for individual or head of household filers, and $2,400 for married filing jointly if they are not a dependent of another taxpayer and have a work eligible Social Security number with adjusted gross income up to:

  • $75,000 for individuals
  • $112,500 for head of household filers and
  • $150,000 for married couples filing joint returns

Taxpayers will receive a reduced payment if their AGI is between:

  • $75,000 and $99,000 if their filing status was single or married filing separately
  • 112,500 and $136,500 for head of household
  • $150,000 and $198,000 if their filing status was married filing jointly

The amount of the reduced payment will be based upon the taxpayers specific adjusted gross income.

Eligible retirees and recipients of Social Security, Railroad Retirement, disability or veterans’ benefits as well as taxpayers who do not make enough money to normally have to file a tax return will receive a payment. This also includes those who have no income, as well as those whose income comes entirely from certain benefit programs, such as Supplemental Security Income benefits.

Retirees who receive either Social Security retirement or Railroad Retirement benefits will also receive payments automatically.1


How much will I receive?

Eligible individuals with adjusted gross income up to $75,000 for single filers, $112,500 for head of household filers and $150,000 for married filing jointly are eligible for the full $1,200 for individuals and $2,400 married filing jointly. In addition, they are eligible for an additional $500 per qualifying child.

For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$112,500/$150,000 thresholds. Single filers with income exceeding $99,000, $136,500 for head of household filers and $198,000 for joint filers with no children are not eligible and will not receive payments.1


If you are one of the individuals who will be receiving stimulus money, you’ll want to be sure to use it wisely. As the economy has become very unstable in the past several weeks, it’s important to not be frivolous with these funds. Follow these 4 tips to put them to good use!

1. Take the Time to Budget

Have you been budgeting? That’s great if so and you should be able to fairly easily see the areas that require most of your attention. If you haven’t been, now would be the perfect time to start. Before you spend any of your stimulus money, review and log your spending from the past few months into categories so you don’t fall into poor habits with the new money. See what expenses can be cut down the most. You can use our budget calculator to get started.


2. Prioritize Your Bills

Once you’ve identified your necessary expenses and areas to minimize spending, it’s time to prioritize what you have left. Take a look at your immediate expenses like your mortgage or rent. You want to make sure these bills are covered first so they don’t fall through the cracks. Keep in mind, if money is tight, your landlord may offer rent relief for the time being. Your credit card companies or personal loan providers may also allow you to defer payments at this time. While those may be worth exploring if necessary, don’t use them as opportunities to put off money that you will eventually owe unless you really need to.


3. Create an Emergency Fund

If you don’t have a savings account or emergency fund set up yet, this money would be a great way to start one. Talk to a representative of your bank about savings account options or look into a high-yield savings account like Simple. An online savings account may allow you to earn more interest than a traditional checking account. If you have any funds available that don’t need to go to debt repayment, think of your stimulus check as a blanket of security for a rainy day.


4. Pay Down Debt 

Debt can be the biggest obstacle in your path toward financial security. This influx of money could be a great opportunity to put a chunk in any outstanding debt you may have. While it may be tempting to put all of your stimulus check toward debt, keep in mind that we don’t know how long our economic instability will last. Therefore you should start by putting away some money for savings so you don’t find yourself continuing to rely on credit in the immediate future and coming months.



1IRS. (2020). Economic Impact Payment Information Center.

Barbara Davidson


Babs is a Senior Content Writer and financial guru. She loves exploring fresh ways to save more and enjoy life on a budget! When she’s not writing, you’ll find her binge-watching musicals, reading in the (sporadic) Chicago sunshine and discovering great new places to eat. Accio, tacos! 

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