5 wise ways to spend and save your Child Tax Credit payments


Parents, here’s how to put that money to work in a meaningful way.

To say the pandemic was tough on parents and kids may be an understatement. Parents lucky enough to hold on to jobs were suddenly working from home while kids self-guided their schoolwork from across the kitchen table.

Parents struggling financially faced even harder decisions, with some forced to weigh family safety against the need to make ends meet.

The good news—beyond vaccines—is that parents are about to get a much-needed boost to their bank accounts.

Starting July 15, eligible parents will receive untaxed advance monthly payments from the expanded Child Tax Credit (CTC) program.

As you know, added income is a rare opportunity. And what you do with yours can have big effects not just on your wallet, but on your family’s peace of mind. By tailoring the tips below to your particular situation, you can hopefully rest a little easier and feel more confident from here on out.

1. Plan or it didn’t happen

To make the most of the Child Tax Credit payments for your family, it’s best to create an intentional plan for the money.

“Figure out how much [the payment is] going to be for you, and then what you’ll do differently to get you and your family in a better place financially,” says Brian Ford, Truist’s head of financial wellness.

Here’s how to create your game plan:

  • Know how much you’ll receive from the advance payments each month. (Hint: We break it down here.)
  • Set family goals you’d like to hit. Make them specific—like, “I want to have $1,500 in our child care fund”—for the most chance at success.
  • When your payments start to roll in, put the money somewhere other than your everyday checking account if you intend to save it. Pro tip: automatic transfers can make this easier.

The effort of a well-thought plan is worth it.

“If you do nothing,” says Ford, “you can expect that money to dwindle away over the next eight to 12 months, and you’ll look back wondering where it went and how it actually impacted your life.” 

2. Tackle that debt

If you used your credit card for necessary purchases like diapers, kids’ clothes, formula, or upgraded distance learning tech, you’re not alone. The CTC payments can help you catch up on some of those credit card bills and eventually free up your cash flow. Once you’ve paid off that consumer debt, you can focus on paying down other debts, like car or student loans.

Read more: How (and when) to consolidate debt

3. Save with purpose

Set a goal for your savings, like funding an emergency savings account. That can help cover unexpected pitfalls like a car repair or job loss, or the bittersweet bill of your daughter joining the travel dance team. If you have nothing saved, consider tucking away $1,000 of your Child Tax Credit payments—and keep it in an interest-earning savings account that’s separate from your spending money so you’re not tempted to splurge. 

4. Put your kids first

The purpose of the money is to help support kids, so keep their needs front and center. If they’re not yet school age, consider child care costs. If they’re older, maybe they need a new laptop. Did you defer a doctor or dentist visit during the pandemic? Do they need new clothes to return to school in the fall? This time has been really tough on them, too, and they’ll appreciate any gesture that shows you’ve got them covered and are doing all you can to get things back to normal.

5. Have a little family fun

As the world starts to return to some sense of normalcy, it’s time to come together as a family. While 80 – 90% of your income (including those CTC payments) should be used to improve your financial standing, the other 10 – 20% could be used to help you and the kids blow off steam after a tough year. Maybe it’s a weekend away, concert tickets for the fam, or just a date night with you and your partner. Whatever you spend your Child Tax Credit payments on, just make sure it’s something you’ll value.

These payments have been called “once-in-a-generation” for a reason. Take a moment to take a well-deserved sigh of relief. Then, start thinking about how to make this new infusion of money work for you and your family.

The information contained herein is general in nature and is not intended, and should not be construed, as tax advice provided by Truist to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her tax professional prior to taking any action based upon this information. Truist assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.