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A third wave of stimulus checks has come at a time when Americans, now a year into the pandemic, are ready to feel some type of enjoyment again.
The next $1,400 windfall of cash provides peace of mind in itself, but the way we use it also has the potential to improve our quality of life even more. Any time someone receives cash they didn't otherwise have, there are some choices as to whether it's used for essential bills, future savings, a much-needed self-care gift or even a gift to others.
No matter what your current financial situation is, Select has some guidance as to how spending the third stimulus check can bring you more joy. We spoke with Dr. Elizabeth Dunn, chief science officer for Happy Money and co-author of "Happy Money: The Science of Happier Spending," about the best ways different segments of people can use a stimulus check.
Because financial advice is not a one-size-fits-all approach, Dunn shares specific tips for those who are struggling financially, those who need a treat and those who have remained financially stable.
Here is her advice.
If you struggled financially and relied on your credit card to help you get by in the last year, a stimulus check is a good opportunity for a fresh start, Dunn says.
The best way to start anew? If these extra funds aren't already earmarked for anything high-priority in your budget (like housing or utility bills), pay off your high-interest credit card balances for a greater sense of financial freedom, peace of mind and, ultimately, happiness.
"From our research at Happy Money, we've found that people with no credit card debt experience 40% less financial stress than those with credit card debt," Dunn says. "Psychologically, this kind of a fresh start is extremely valuable."
Dunn goes on to add that customers at Happy Money with no debt are more than 4X as likely to report having plenty of leisure time (time affluence) than those with $5,000 or more in debt. "And people who are higher in time affluence report being happier," she says. "Plus, paying off credit card debt should be a huge celebration in and of itself!"
With introductory 0% APR periods, balance transfer credit cards allow you to move your credit card debt to a card with zero interest for up to 20 months. This way, you can use your $1,400 stimulus check to make a dent in your credit card balance over time without accruing more interest.
Some of the best balance transfer cards also offer zero interest intro periods on new purchases, such as the U.S. Bank Visa® Platinum Card, the Citi Simplicity® Card and the Wells Fargo Platinum card.
You certainly aren't alone if after a year of being in quarantine you're craving to do something, whether that is simply a nice meal out or rescheduling a trip you had to cancel. A $1,400 stimulus check is an opportunity to find happiness by starting to plan again for something enjoyable, especially as the vaccine rollout continues in the coming months.
If you are in good shape financially, start thinking about how this extra cash can be used on a future experience. Keep in mind that whatever it is, it doesn't have to be lavish.
"Because most of us have been home for many months, we will likely experience a 'happiness reset' — so even more modest vacations are likely to give us considerable pleasure," Dunn says. Not to mention, there are also psychological benefits that come with taking a trip somewhere or investing in an experience with our friends or family.
"In fact, we've found that more than 80% of people under 30 reported deriving more happiness from buying experiences like trips or special meals than from buying material things, such as gadgets or clothes," Dunn adds.
The best part is that you can have fun with the research and planning process so that you feel rewarded before the trip or experience even takes place. The anticipation of something in the future is enough to make us happy, according to Dunn.
"That's because when we purchase an experience, we start to consume it now," she says. "Once the trip is paid for, it becomes tangible — it becomes yours. Paying upfront for an experience you want to enjoy down the road helps reduce the dread of debt and increases the happiness connected with 'owning' the experience."
Giving back is a good way to spend your stimulus check and get a serious happiness boost, according to Dunn. If your financial life has remained largely unchanged during the pandemic, use that money to make a charitable donation (donations to nonprofits dropped significantly during the pandemic) or help out a family member, friend or neighbor.
"Over a decade of research indicates that you're more likely to derive happiness from spending money on someone else," Dunn says. "Giving is essential — not only because it feels like something you 'should' do, but because it can actually benefit your own financial and emotional wellness."
To get excited about making a donation, choose a charity or cause that you care about. For pandemic-related causes, Charity Navigator offers a whole webpage on highly-rated nonprofits providing relief and recovery to communities impacted by Covid-19.
"The very act of giving can shift your perspective and help you take stock of all that you have, leaving you happier while you make the world a better place for others," Dunn says.
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Information about the Wells Fargo Platinum Card has been collected independently by Select and has not been reviewed or provided by the issuers prior to publication.