Baby tax credit score cash: Make a plan now for learn how to use the funds after they come

How Might You Spend Your Child’s Tax Credit?

Sarah Tew / CNET

You could get as early as July the first payment As part of the extended tax credit for children that’s part of March American rescue plan Package. You will usually get the tax credit back after filing your tax return Income taxes every year, But President Joe Biden’s March Stimulus Plan will get you the money in a series of payments this year through the end of 2021 and through 2022. when you and your family qualify. Overall, you could get up $ 3,000 or $ 3,600 per child, depending on their age. This child loan is in addition to the payments included in the American Rescue Plan, such as: third round of stimulus testing. The question is what are you doing with the money?

These payments can be an opportunity to get your finance home to ensure that your family – including your children – is on solid foundations. To help you ponder the different ways you can use these payments, we spoke to financial experts and credit counselors about their recommendations for using this money, from meeting urgent needs and paying off debts to building an emergency fund. This expansion of the child tax credit is part of a larger multi-billion dollar effort by President Joe Biden’s administration to get the country out of the pandemic and put individuals and families on better economic footing. This child tax credit is an integral part of Biden’s plan to put money in the pockets of families who need it most.

Of course, the money is without commitment and you can use it as you wish. However, if you are looking for ideas on how to make good use of the payments, we have suggestions. For other ways you can save or get money this year, here’s what happened Cancel student debt, as you can see If your state has money from you, this is what you can claimand how March’s Stimulus Bill can help you Save money on healthcare costs.

First, make a plan on how to use your child’s tax credit

Your first child tax credit check may take weeks, and probably not until July. So you have time for it Make a plan for what you’re going to do with the money before it arrives. You can find out how much (in total and per month) you can expect with CNET’s Child Tax Credit Calculator by providing a few details: how many children you have, your income and your enrollment status.

Next, think about your financial goals for how the money will be used. “The most important thing is to start planning now,” said Emily Shallal, senior director, customer strategy and innovation at Allied Banksaid CNET. “You don’t want to look back on that money with regret and wonder what happened.”

Here are some ways you can use the money.


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Meet your family’s basic needs

First, cover the urgent needs of your family – including your children -: budget for groceries, housing, utilities, and essential items like medicines. You could use some of the money on a necessary car repair or medical or dental procedure that you’ve postponed.

Pay off your “toxic” debts, including credit cards

Once you have the necessities covered, depending on your situation, it may make sense to address yours most expensive debts. “If you find yourself in a situation where you have a lot of what I would call ‘toxic debt’, paying back those balances should be your number one priority,” said Bruce McClary, senior vice president of communications at the company National Foundation for Credit Advicesaid CNET. Clary said that “toxic debt” is high-yield unsecured debt such as: Credit cards and Small loans and debts that went into collections that could become a bigger problem for you later.

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You can use the money to pay off your toxic debts.

Sarah Tew / CNET

Start an emergency fund

Next, you might want to set up a rainy day fund.

If you meet other requirements, you may want to put some of the cash from the checks in an emergency fund to create a financial cushion. According to Mike Schenk, deputy chief advocacy officer for policy analysis and chief economist at the National Association of Credit UnionA rainy day fund can help reduce stress for a family, knowing that in the event of an emergency such as your car breaks down, the costs will be covered.

While the rule of thumb is to get 3 to 6 months worth of savings in an emergency fund, that amount can be impractical for some. Schenk told CNET that he recommends that you start with a more modest goal – say, $ 1,000 – and work your way up to a larger buffer.

Budget for the future

You can also use some of the money on your savings to achieve a longer term goal – for a Down payment for a housefor example a 529 account to help pay for college or a business and vocational school, or to build yours Retirement account.

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You could also use some of the money to build an emergency fund.

Sarah Tew / CNET

Get help creating a savings or debt reduction plan

If creating a debt reduction plan or a savings plan seems intimidating, affordable (or possibly free) help can be obtained from a debt reduction advisor or financial advisor.

A non-profit credit counseling agency like that National Foundation for Credit Advice can help you manage your debt, be it credit cards, a mortgage, or student loans. The agency can work with your creditors to make discount payment arrangements and then manage your payments into those accounts. In most cases, an initial debt counseling session is free, Clary said, where you can meet with a debt counselor to discuss your situation and get specific recommendations. If you choose to work with an advisor to manage payments to your creditors, the agency may charge you $ 25 to $ 35 per month to manage your plan. The agency can waive these fees for those below the poverty line.

You can also work with a financial advisor to create a plan for using child tax credit money and set goals. Schenk said as a member of a credit unionyou can work with a consultant to come up with a plan for your specific situation. Other financial institutions, such as banks, may also provide financial advice as a service.

What about spending on the things you want instead of the things you need?

The counselors said you could set aside some of the money for something special for you and your family. Take your family with you to dinner, for example. However, they advised against using it on a big screen TV, for example, or throwing a party until you’ve hit the other points outlined in your plan. “You could end up at a time when you really need the money and just make a few impulse buys,” Clary said.

Other ways to save money The IRS can owe you money for taxes You paid for labor insurance like the next one Stimulus plan could benefit youand how you could get up $ 50,000 back with one-time COVID credits.