How To Get Started Investing With Your Stimulus Check

Key takeaways

• More than 15 states are issuing new stimulus checks and/or tax rebates to help offset soaring inflation
• Meanwhile, unemployment rates returned to pre-pandemic lows in July
• Despite sky-high inflation and declining GDP, rock-bottom unemployment numbers and sky-high inflation contradict claims we’re in a recession

During the pandemic, three rounds of federally-issued stimulus checks and increased unemployment payments through struggling Americans a lifeline. Now, as inflation continues to bash wallets – hitting 8.5% annually in July – several states are issuing their own stimulus checks.

While it’s a welcome relief for Americans watching their paychecks be consumed by rising rent and gas prices, relief comes at an unusual time. Despite GDP declining two quarters in a row (the “official” threshold for recession), lower unemployment numbers and rising wages tell a different story.

Let’s untangle the financial web.

Who’s getting stimulus checks?

First thing’s first: who’s getting stimulus checks, and how can you qualify?

At this time, only a handful of states have announced official stimulus checks. Some have already sent out funds or are in the process of doing so. Others will start issuing money later this fall.

Here’s what you need to know.

California

In late June, Governor Gavin Newsom announced the brand-new “Middle Class Tax Refund.” Aimed at relieving the financial burden of inflation, this program earmarks $9.5 billion of the state’s budget for stimulus checks.

To qualify, you must:

• Have filed your 2020 tax returns before 15 October 2021
• Have resided in California for at least half of 2020
• Not have been listed as someone else’s dependent
• Be an official resident when payments go out

Eligible individuals must also meet the program’s adjusted gross income requirements.

If you check all these boxes, you could receive up to $1,050 between late October and mid-January.

Colorado

The Colorado Cash Back Bill is set to pay out a one-time tax rebate later this year. The only listed qualifiers are that you must have been a full-year Colorado resident in 2021, at least 18 on the last day of last year, and have filed your refund by 30 June 2022.

Individuals will receive their checks between 30 September 2022 and 31 January 2023, depending on when you filed your last tax return. Single filers are eligible for up to $750, while joint filers can receive up to $1,500.

(Note: this isn’t technically a stimulus check; it’s a tax refund. But we’re of the mind that cash is cash.)

Delaware

Under the Delaware Relief Rebate Program, every adult resident will receive a one-time payment of $300. To qualify, residents must have filed their 2021 state tax return by the listed due date. Checks began going out over the summer, according to Delaware’s Department of Finance.

Florida

Last month, Governor Ron DeSantis approved a one-time payment of $450 to around 59,000 residents under a “Pandemic TANF Funding” initiative. To qualify, you must be a caregiver, foster parent or on certain state assistance programs. You can learn more about qualifying recipients and programs here.

Georgia

This past spring, Georgia’s governor approved a tiered, one-time tax refund to help Georgia residents weather higher inflation. Under the law:

• Single filers will receive $250
• Heads of household will receive $375
• Joint filers will receive $500

According to Georgia’s Department of Revenue, most payments went out by early August. (Assuming you filed state taxes by the appropriate deadline.)

Hawaii

In late June, Hawaii Governor David Ige signed a measure to refund every Hawaiian resident between $100 and $300. Eligibility and the amount received varies based on tax filing status, income and various exemptions. The state’s Department of Taxation notes that stimulus checks will begin appearing in mailboxes in late August.

Idaho

Back in March, some Idaho residents began receiving a one-time tax rebate of $75 or 12% of their 2020 state tax bill – whichever was greater. Eligible recipients must have lived in Idaho in 2020 and 2021 and filed either grocery-credit refund or income tax returns in both years. Idaho’s State Tax Commission has more information.

Illinois

Illinois set several inflation relief plans into motion this year, including:

• A temporary suspension of the state’s 1% sales tax on groceries
• A sales tax reduction from 6.25% to 1% on other goods
• Pushing back the gas tax hike until January 2023

Residents will also receive income tax rebate stimulus checks totaling $50 or $100, based on income and filing status. Filers with dependents will also receive a $100 credit per child (limit three per household).

According to a state press release, checks will issue the week of 12 September.

Indiana

Governor Eric Holcomb took advantage of a state law regarding excess financial reserves to issue a one-time stimulus check of $125 to residents this year. All full-year residents received checks in either May or July (regardless of income level) assuming they filed their 2020 tax returns by 3 January 2022.

Indiana is also debating issuing one-time stimulus checks of $225 from the state’s surplus tax revenue. That bill has yet to be approved.

Maine

Thanks to legislation signed in April, Maine is issuing one of the largest tax refunds of any state: $850 to single filers and $1,700 to joint filers. According to Maine Revenue Services, the checks began issuing in June, but haven’t all been sent out yet.

To qualify, residents must reside in Maine year-round and file their 2021’s income tax return by 31 October 2022. Income limits also apply ($100,000 for separate filers; $150,000 for joint filers.)

Massachusetts

Massachusetts Governor Charlie Baker has stated that residents will receive a 7% refund of their 2021 state income tax payment to ease inflation’s impacts. The official amounts will be decided and issued in late September by the State Auditor.

The state also recently failed to approve one-time stimulus checks of $250. But under a 1986 law regarding excess tax revenue, many residents may still see their share of the state’s $2.5 billion surplus.

New Jersey

New Jersey is currently debating a $1,500 rebate for eligible families paying property taxes, including renters. (The measure has yet to pass, but you can read more here.)

Additionally, under legislation signed last year, eligible residents will receive a $500 child tax credit this year and each year going forward. Qualifications include filing by the normal or extended deadline, claiming at least one child as a dependent, income restrictions and paying a tax bill of $1 or more.

New Mexico

New Mexico issued two separate stimulus checks this year.

First, residents received a rebate of $250 to $500, based on income and filing status. That rebate paid out automatically this month to anyone who filed their 2021 state income tax return.

The second rebate is scheduled to total $500 or $1,000, based on filing status. This rebate is paid in two parts: half delivered in June, and the other half by the end of August. According to New Mexico’s Taxation and Revenue website, this rebate goes to anyone who’s already filed their 2021 tax return.

Oregon

Oregon residents, take note: if you haven’t received a state stimulus check yet, you probably won’t. Oregon issued one-time assistance checks and direct deposits of $600 to qualifying residents between June and July of this year. Eligible residents were low-income filers who lived in Oregon at least half of 2020 and claimed the state’s Oregon Earned Income Tax Credit (EITC).

South Carolina

South Carolina is set to pay out up to $800 per person in income tax rebates. Anyone can qualify, as long as they’ve already filed last year’s income taxes. The state’s Department of Revenue notes that these checks will start issuing in November and December of this year.

Virginia

Virginia taxpayers are eligible to receive up to $500 under the state’s one-time tax rebate program. (Amounts differ based on filing status.) To receive a check, you must file your tax return by 1 November. The state’s Department of Taxation notes that these stimulus checks won’t start hitting mailboxes until later this fall.

Meanwhile: a falling unemployment rate

Now, let’s turn our attention to other good news: the nation’s falling unemployment rate.

According to the Labor Department’s July jobs report, non-farm payrolls soared 528,000 last month, compared to the 250,000 most experts expected. That drove the unemployment rate down to 3.5% (slightly below the 3.6% expected), and down substantially from the start of the pandemic.

But that wasn’t all. In the same month, hourly earnings bumped up 0.5% from June, with wages rising 5.2% annually.

All in all, Labor Department data shows that total nonfarm employment is up 22 million from its April 2020 lows. In fact, as of July, the labor markets have exceeded pre-pandemic metrics by about 30,000 jobs.

July saw the biggest job gains in service industries, which are still making gains on their pre-pandemic numbers. Meanwhile, the professional and business services sectors also stood out, with extra jobs added in positions like management, office administration and scientific research and development.

What does the lower unemployment rate mean?

Overall, the news exceeds expectations and defies signs that economic recovery may be slowing, or even reversing. At the same time, higher wages and increased hiring point to the fact that inflation is still with us. (Hence, the need for state stimulus checks.)

Though the news is good for employee paychecks and economic growth, it suggests that more rate hikes could dot the horizon.

Economist expectations remain mixed

Following the jobs report, some economists noted that low unemployment points to a strong economy and overblown talk of recession.

On the other hand, sinking unemployment coupled with high prices is consistent with an inflationary boom. And the labor market’s unusual tightness has remained a focus for Fed policymakers, since the disparities between job openings and worker availability continues to place upward pressure on wages.

Ironically, as these positive factors continue to contribute to inflation, which may force the Fed to remain on its current rate hike schedule, a fact that feeds the recession debate.

While the unemployment rate is low and dropping, GDP – which measures the price tag of an economy’s output – has fallen two quarters in a row. Though that meets the technical definition of a recession, both the White House and Fed have indicated that other metrics don’t yet add up to recession.

What to do with your stimulus check

When you receive a (perhaps unexpected) check from your state government, it’s tempting to blow it immediately. And if you’re in need, expenses come first.

For instance, you may pay more toward high-interest debts like loans or credit cards, catch up on your mortgage or even buy school supplies. And if your emergency fund is a little bare, it might be worth stashing some of your cash away for a rainy day.

But if you don’t need the money for urgent bills, we have another proposition. That’s right: investing.

Invest your stimulus checks for a better future

Despite rising inflation, the unemployment rate continues to drop while wages are on the rise. If you’re not at risk of being priced out of your apartment or commute thanks to inflation, a lump-sum investment may be just what your finances need.

On one hand, it’s true that dollar-cost averaging is one of the best ways to smooth over volatility in your portfolio. However, historical studies suggest that a timely lump-sum investment can produce greater long-term returns.

And though the market is on the rise, the major indices remain down year-to-date, offering plenty of wiggle room to capture profits.

Or perhaps you’d prefer to save half and invest the rest – after all, it never hurts to have a safety net.

Either way, Q.ai has just what you need. (Even if you don’t get a stimulus check.)

With our curated Investment Kits, your money goes into the markets to start working for you. Meanwhile, your Cash Reserve balance will earn a little interest on saved funds without being subject to the whims of the market.

It’s the simpler, smarter way to invest – no matter the economic climate.

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