These payments can be an opportunity to get your financial home to help ensure that your family – including your children – is on a more solid foundation. To help you think about the different ways you can use these payments, we’ve talked to financial experts and credit advisers for their recommendations on ways to use this money, from meeting urgent needs and paying off debt to building debt. an emergency fund. This expansion of the tax credit for children is part of a larger, multi-billion dollar effort by President Joe Biden’s administration to lift the country out of the pandemic and give individuals and families a better economic base. This child discount is an important part of Biden’s plan to get money into the pockets of families who need it the most.
The money is of course non-binding and you can use it however you want. But if you’re looking for ideas on how to make good use of the payments, we have suggestions. For other ways you’re saving or getting money this year, here’s what’s going on, how to see , and how the March incentive bill can help you .
First, make a plan how you will use the money from your child discount
Your first child discount check may not come in weeks, probably July, so you have the timefor what you are going to do with the money before it arrives. You can find out how much to expect (in total and per month) using CNET’s child discount calculator by providing a few details: how many kids you have, your income, and your application status.
Then think about your financial goals for using the money. “The important thing is to start planning now,” Emily Shallal, senior director of customer strategy and innovation at Ally Bank, told CNET. “You don’t want to look back on this money and wonder what happened.”
Here are some of the ways you could plan to use the money.
Meet your family’s basic needs
Cover the urgent needs of your family – including those of your children – first: budget for groceries, housing, utilities, and essential supplies such as medicines. You can use some of the money for a necessary car repair or a medical or dental procedure that has been delayed.
Pay off your ‘toxic’ debts, including credit cards
Once your needs are met, depending on your situation, it may make sense to use your. “If you’re in a situation where you have a lot of what I would call ‘toxic debt,’ paying off those balances should be your number one priority,” said Bruce McClary, senior vice president of communications at the National Foundation. for Credit Counseling, told CNET. Clary said that “toxic debt” also includes high-interest unsecured debt, such as credit cards and small dollar loans, and debts that have been collected that could later become a bigger problem for you.
Start an emergency fund
Next, you may want to set up a rainy day fund.
If you meet other needs, you may want to put in some of the cash from the checksto create a financial cushion. According to Mike Schenk, deputy chief advocacy officer for policy analysis and chief economist at the Credit Union National Association, a rainy day fund can reduce stress for a family because you know that when you’re faced with an emergency like your car broke down, then you will get the costs covered.
While the rule of thumb is to have 3 to 6 months of savings in an emergency fund, that amount can be impractical for some. Schenk told CNET that he recommends you start with a more modest goal – say $ 1,000 – and work your way up to a bigger buffer.
Budget for the future
You can also choose to put some of the money into your savings to achieve a long-term goal – for a, For example, a to help pay for college or trade and vocational school, or to help you .
Get help creating a savings or debt reduction plan
If creating a debt reduction or savings plan seems intimidating, you can get affordable (or possibly free) help from
A nonprofit credit counseling firm, such as the National Foundation for Credit Counseling, can help you manage your debt, be it credit cards, a mortgage, or student loans. And the agency can work with your creditors to draft reduced payment agreements and then help you manage your payments in 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 decide to work with an advisor to manage payments to your creditors, the agency may charge $ 25 to $ 35 per month to manage your plan. For those below the poverty line, the agency may waive those allowances.
You can also work with a financial advisor to create a plan for how to use the child discount money and set goals. Schenk said that as a member of a credit union, you can work with an advisor to create a plan for your specific situation. Other financial institutions, such as banks, may also provide financial advice as a service.
How about spending on things you do want instead of things you need?
The advisers said you could put some of the money aside for something special for yourself and your family. Take your family out for dinner, for example. But they advised against using it on a big screen TV, say, or throwing a party until you hit the other items outlined in your plan. “You might find yourself at a time when you really need the money and just made a ton of impulse purchases,” Clary said.
For more ways to save money,you paid on employment insurance, how the next , and how you could get it .