Making the Tax Credit Work for You
Decisions, Decisions! What to do if you receive an early child tax credit!
With the advancement of the child tax credit starting this month, many Americans are at odds with adding the credit into their budgets. Families with children ages 6 to 17 will receive $250 per child and $300 for every child under six years old. Regardless of the dollar amount you receive each month, making that money work for you should be your top priority.
Here are three ways that may help set you up for financial success.
Spend: Use the monthly payments to catch up on monthly expenses, buy extra groceries to freeze for later, or pay down some existing debts are all great ways to use the money to help set yourself up for financial stability. If you are already in a stable financial position, using the monthly payments to help fund some fun family time may be just what your family needs after the crazy year you’ve endured.
Save: Setting money aside is a great way to start an emergency fund or help you achieve your financial goals faster. Another option is to put the extra funds into high interest-yielding savings accounts and can be used for expenses when needed. Let your money work for you.
Invest: If you have already established an emergency fund that amounts to three to six months of expenses, perhaps you may consider increasing your retirement fund or add/start a 529 plan which will help fund your child’s future.
The 6-month child tax credit is half of what you would be receiving as the child tax credit when you file your taxes in 2022 for the 2021 tax year. Making good use of this money can benefit you now, setting yourself up for future financial success, especially when you receive the other half of your credit in your refund next tax season. If you need help deciding where to allocate the monthly payments, contact Carrielyn Reynolds, Financial Education Coordinator, at (207) 660-6267, or email creynolds@newdimensionsfcu.com.