Hundreds of thousands of Alaskans are receiving their Permanent Fund Dividends this week. This year’s payout is $1,200, which includes a $200 “energy relief” payment.
There are a lot of things you could do with the money, but how should you spend it? An economist and a financial advisor have some advice for you.
Save, Spend and Splurge
Laurel Renkert is a financial advisor in Anchorage who recommends splitting your PFD into even thirds: spending, saving and splurging. That’d be $400 of this year’s check in each category.
Renkert said the savings contribution can apply to a variety of things, like a retirement account or Roth IRA.
“That can be a great way to put something away for future you,” she said.
She suggests the second chunk be spent on something you need.
For Renkert and probably many other Alaskans, that’s snow tires. But she said it can also apply to credit card or medical debt you’ve been working to pay off – things that feel financially claustrophobic.
“It’s what we call squid on your face – you can’t really focus on anything else because you’ve got this expense or this bill kind of staring down at you, and it would just feel good mentally to have that dealt with,” she said.
If you have multiple debt obligations, she said it’s best to pay off the one with the highest interest rate first. This method can get you debt-free faster and can save you money in the long run, according to Experian, a nationwide credit reporting agency.
Renkert advises splurging the last bit on yourself. She recommends an experience over tangible items because the memories you make have added value.
“Maybe it’s a concert ticket that you wouldn’t normally buy otherwise, just because those prices are outrageous these days,” Renkert said. “Or an airline ticket – maybe you couldn’t buy an entire ticket, but maybe the majority of it would be doable with this amount.”
Along with snow tires, Renkert plans to contribute money from her and her two kid’s PFD’s into their Alaska 529, a college savings plan.
PFD week can feel a bit like Christmas, but instead of a gift from Santa, it’s a check from the State of Alaska, with an amount ultimately determined by state lawmakers.
Many businesses offer sales to Alaskans around the time they receive the PFD, including Alaska Airlines. The company’s annual sale runs through Oct. 5, and travel experts say using mileage is the most cost-effective approach.
But Renkert recommends not being lured in by PFD sales.
“Instead, wait until Black Friday because those deals are typically a lot more significant in terms of cost savings,” she said.
Renkert said there’s not necessarily a “wrong” way to spend your PFD, but that if a better deal may be on the horizon and the only cost is time, it is best to wait.
A $200 energy relief payment
This year’s PFD includes a normal dividend of $1,000 plus a $200 energy relief payment, combined into one check. Experts say they aren’t thinking of the energy money separately, but Alaskans might.
Brett Watson is an associate professor of economics at the University of Alaska Anchorage’s Institute of Social and Economic Research.
When you put a label on money, Watson said it can change the way people respond to receiving it.
“When we call cash an energy rebate, people tend to turn up the thermostat. When we call cash a fuel rebate, people tend to buy more fuel – even if they could spend that money on anything else that they wanted to,” Watson said.
Of course, there’s no requirement that the $200 actually be spent on heating or fuel.
This year’s $1,200 payout is the smallest since 2021 and Watson said its purchasing power has changed over the decades.
“The PFD used to represent a larger share of Alaskans’ income, and so it’s gotten eaten away a little bit by inflation, but also in cuts to dividend spending,” he said.
Watson plans to donate his entire $1,200 PFD to his church in west Anchorage. The PFD schedule changes slightly each year, but the payment typically hits in early October.
Watson said this allows people to plan ahead – some Alaskans might make purchases early, knowing they can pay them off later, while others might wait for the funds to land in their account before spending.
“People can start to prepare for getting it, and that means that they can start spending their dividend if they’ve got a credit card fairly early in the year,” Watson said. “It’s about balancing money that we’ve spent in the past, money that we’ve spent today, and money that we’re spending in the future.”
