Over the last couple of months, I’ve been helping my clients get ready for the advance child tax credit payments that may arrive in their bank accounts this month.
Have you given any thought as to how you will use this money?
Something important to keep in mind is that if you rely on your tax refund each spring, know that it could be impacted. You may want to talk to your accountant to fully understand how this payment is different than the previous stimulus checks.
If you have been following me any length of time, you know I always think you need a plan for your money – regardless of where it’s coming from (i.e. bonus, tax refund, larger than usual commission check, etc.)
What does that look like for the advance child tax credit payments? Make a plan for that money!
Here are some suggestions:
💰 Save it! But don’t just save it to be saving it! What are you saving it for? If you know your family has upcoming expenses that you can’t typically pay cash for, set this money aside for those expenses so you don’t take on any new debt. This could be car repairs, upcoming medical expenses, the holidays, etc. This would also be a great way to start building your emergency fund.
If you find it difficult to save money, I suggest automating your savings with your bank. Once you know which day of the month you will receive these payments, set it as an automatic transfer from your checking account to your savings account. This will help remove the temptation to use the money differently than originally planned.
💰 Extra debt payments! Put that money to good use and apply it towards your debt! This will help you get your debt paid off faster and keep you motivated. If you are consumer debt-free (debt-free except for your house), you might even want to consider paying it towards your mortgage.
💰 Invest it! This may be a good option for you especially if you are consumer debt-free and have a 3-6 month emergency fund in place. You could invest it in your retirement account or your children’s college funds.
💰 Give it away! That’s right! If you are to the point in your finances that you have an emergency fund, are consumer debt-free, and investing it regularly this may be a good option for you! Use that money for good!
Regardless of what you decide to do with the money, I want you to have a plan for it before it arrives in your bank account!
Be intentional with how you use this money. If you don’t have a plan, it will disappear!
