5 Ideas on How to Spend Your Child Tax Credit and Stimulus

One of the best things about being a child living in the U.S. is that you will benefit from Joe Biden's monthly Child Tax Credit payment set to start this summer.

The stimulus check bill will provide families earning less than $150,000 with a check of $1,400 and $300 for kids aged 6 to 7.

In addition to the $1,400 stimulus checks, President Joe Biden signed a $1.9 trillion coronavirus relief bill that would offer direct financial support to parents around the country.

Although the legislation doesn't specify how the money from the child tax credit should be spent, we've come up with a few ideas about how parents can use it to help their children financially.

Pay for Tutoring Classes

You might have noted that your child might be suffering academically as a result of the Covid-19 pandemic-related school closure and the transition to remote learning.

Using private tutors to supplement your child's education will significantly work on boosting their grades.

Practice Good Dental Hygiene

You might have noted that your child might be suffering academically as a result of the Covid-19 pandemic-related school closure and the transition to remote learning.

Using private tutors to supplement your child's education will significantly work on boosting their grades.

Add to Your Emergency Fund

The importance of having an emergency fund cannot be overstated. As this pandemic has shown, things can change quite fast.

The fund should be sufficient to cover three to six months' worth of expenses. Although the $1,400 might not cater for everything, it's a good start. 

A savings account is an ideal place to store the money. If you had to dip into it in the last year's savings, it might be a good time to open a savings account.

College Savings Plan

Regardless of how much time it might take, your children will finally thank you for setting up college savings account for them.

Opening and contributing to a 529 college savings plan will help them get on the right track for their future — and relieve some of the financial burden that comes with preparing for college.

Technically, you have two choices for financing your child's higher education: either save and spend a significant amount of money or prepay tuition at the desired institution.

Donate

Is your family doing well in the midst of the current Covid-19 pandemic? Statistics reveal that nearly 11 million people are living in poverty across the world. Technically, there are plenty of children who aren't doing so well.

The Child Tax Credit payments and $1,400 stimulus check can be a great way to teach your children about giving to those in need.

Encourage them to participate by allowing them to choose a charity where they can donate their funds depending on their interests or age group.

Teach Them to Invest

Parents who wish to give their children a financial head start can use the extra money as seed money for them to begin saving.

Starting with fractional shares is a safe way to get your kids involved in investing without having to spend any of your tax credit money in their favorite businesses.

What's more, you will also be setting your children on the road to financial security at a young age. You can also help them create their bank account and own a debit card. 

One of the best things about this option is that you can use an app to operate the debit card. Also, to help them handle cash at an early age, you can set up the card to automate allowance payments, assign chores, or create parent-paid interest rates.

Final Thoughts

There is no doubt that the $1,400 will significantly prove to be beneficial to millions of people across the U.S. However, if not properly managed, the amount might not be beneficial. The above tips will not only help you manage your kid's tax credit money but also ensure you teach them how to manage funds from an early age.