I love helping creatives make transformational decisions that give them the best shot at pursuing the life and career they desire.
In a matter of days, many of you will likely be receiving the latest round of stimulus funding from our government.
How will you use this funding to take you from where you are now, to a life and career more deeply rooted in financial stability?
Here is a step-by-step process on how creatives should spend their stimulus funding.
- Step One: Take Care Of Your Immediate Needs — Before you consider any use of this funding, make sure your immediate needs are covered. Are you able to cover your rent? Can you purchase food? Are you able to cover any additional bills. If the answer is no to any of these things, you need to use your stimulus funding to cover these costs. This might also be a sign that it’s time for you to dramatically cut your costs/change your way of living. Consider moving in with a family member, gaining a roommate or moving to a less expensive part of the country.
- Step Two: Gain A Financial Cushion — After your immediate needs are met, your goal is to have a minimum of $1,000 in your savings account at all times. When my wife and I were able to do this, it dramatically reduced our need to go deeper into debt using credit cards. If you don’t have $1,000 in the bank at this time, that is where your stimulus funding should go.
- Step Three: Pay Off Debt — The pandemic has been difficult for creatives and I know many who have racked up quite a bit of debt over the past year. Instead of revolving this debt for longer periods of time, see how much you can tackle with your stimulus funding after you get $1,000 in the bank. The faster you can get out of debt, the faster you will be on a path to financial stability.
- Step Four: Save The Money — This is a completely boring thing to do but if your immediate needs are covered and you’re out of debt, I would suggest that you hold onto your stimulus funding until you really need the funding. In the coming weeks and months, a lot of businesses are going to try to get your stimulus money by marketing huge deals on everything from computer products to airline tickets, knowing that there’s a little extra money in your pocket. If you can, use this money to start building upon your financial cushion of $1,000 until you have of 3-6 months of take-home pay in the bank. That way when the next big disruption comes, you are prepared.
- Step Five: Invest The Money — If your basic needs are covered, you’re out of debt and you have a fair amount of money in the bank, congratulations, you’re a unicorn. If you are one of those rare animals, consider investing a minimum of 15% of your stimulus funding into mutual funds or index funds. Here’s a handy little article about why it’s important to invest early and often. The earlier you can invest, the better your financial stability you will have in the long run. Investments
- Step Six: Spend Some Of The Money — If you have made it to step six and you can confidently say that steps one through five are covered, congratulations, you have my permission to support the economy by spending some of the money you received. Although it’s tempting to spend it all, my suggestion if you’re solidly on this step is to spend half on something nice, and invest/save the other half.
If you follow this step-by-step process, I think you’ll find financial stability pretty quickly.
Thanks for reading and I’d love to hear what things you’re planning to do with your stimulus funding.
Like what you read here? Join my newsletter below to receive weekly tips just like this, designed to help creatives like you navigate most important decisions in your life and career.