The new child tax credit payments are back on track — here’s how to plan for them


The new child tax credit payments are back on track — here’s how to plan for them

With $1,400 stimulus checks for every member of the household already in families’ accounts, and monthly child tax credit payments set to start this summer, your child may soon be raking in the dough.

The expanded tax credit, included in the stimulus checks bill, will provide families earning less than $150,000 (or $75,000 for a single earner) with monthly $250 cash payments from July through December for each child aged 6 to 17. And for kids under 6, you’ll receive $300.

IRS Commissioner Chuck Rettig said last month that the monthly payments could be delayed because the agency was overburdened with tax season duties. But at a Senate hearing last week, Rettig said the IRS would be ready to roll out the money in July as planned, barring “some unforeseen circumstance.”

For eligible families who don’t need the funds to pay down debt or deal with household essentials, the influx of cash offers amazing opportunities to teach children about managing money.

Rather than just letting the cash sit in your account, here are a few ways you can put it toward something practical or educational for your children.

1. Buy savings bonds

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Savings bonds are excellent gifts for kids, especially younger ones who won’t be tempted to cash them in any time soon.

Bonds are essentially like loans you give the U.S. government. They can be redeemed any time after 12 months, but cashing them in too soon can lose you a significant chunk of interest or even cost you a penalty.

Series EE or I savings bonds will earn interest for up to 30 years. You can buy them, in your child’s name, online at

2. Get children their own debit cards

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Another great way to teach your kids about managing money is to set them up with their own debit card.

There is a safe and secure debit card parents can control through an app.

You can set up the card to automate allowance payments, establish parent-paid interest rates or assign chores to help your kids manage some early income.

3. Open a savings account

Piggy banks are fun, but your kids’ savings aren’t doing anything for them sitting on the shelf. A savings account can not only help you teach them how banking works, it puts the funds to work too.

What you should look for is an online savings account that has a higher interest rate. Then, together, you can come up with some savings goals — like for a new video game console, bike or art supplies.

While your kids are still young, you’ll probably have to sign on as a co-owner of the account. But once they’re mature enough to take control, you can transfer it over to them to manage.

4. Start a college savings fund

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It may take a few years (or decades), but your children will eventually thank you for setting up college savings funds for them.

Opening and contributing to a 529 college savings plan will help set them on the right track for their future — and help offset the stress of paying for higher education.

These plans are offered by states and also boast certain tax advantages. You can either save and invest a pile of money for your child’s higher education or prepay for tuition at a participating school.

5. Put together a thank-you package

Have your children’s teachers been working double-time this past year to make the challenges of the pandemic a little easier for your kids? Or maybe Grandma and Grandpa have been helping you out with child care so you can continue to work?

If someone in your children’s life deserves a special shout-out, you can also use this as an opportunity to teach them about expressing gratitude.

Whoever you decide to thank, when you’re shopping around for the right gift, make sure you stretch your dollars as much as possible. Download a free browser extension that automatically scours for better deals and coupons whenever you shop online.

6. Make donations

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Is your family holding up fine throughout the pandemic? With nearly 11 million children living in poverty across the country, there are plenty who aren’t faring so well.

The child tax credit payments your kids are set to receive can serve as a perfect opportunity to teach your young ones about giving to those in need.

Get your kids involved by having them help pick a charity to donate their funds, based on their interests or age group. And don’t forget that you can claim these donations when you file your taxes next year.

7. Purchase life insurance

One of the best things you can do for your kids is ensure they’ll be taken care of if anything were to happen to you.

Using your funds to buy an affordable term life insurance policy will ensure your children won’t have to worry one day about paying for your funeral expenses or medical bills.

Alternatively, buying permanent life insurance policies for your children can build up thousands of dollars in “cash value” for them by the time they’re grown up.

8. Use the cash for something fun

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After all the lessons on spending money responsibly, saving and investing, why not give your kids a little to spend for fun?

Maybe they want a new pair of running shoes or a family-friendly board game. Whatever it is, letting your kids pick how they spend some of their cash can help them feel empowered and mature.

If you just want to relax and spend time together during the pandemic, you could subscribe to a service that includes streaming movies, shows and music that the whole family can enjoy — with the added benefit of saving on whatever new gadget your kid has saved up for.

9. Give your kid share of stock or investment account

A stock option from a big-name company is actually the gift that keeps on giving. And there’s no better way to teach kids about stocks than making them stockholders themselves.

Are your kids obsessed with Frozen? Buy them stock in Disney. Or maybe you can’t drag them off the computer at bedtime. You can buy them stock in Roblox, or maybe Nintendo.

And if you want to encourage a lifelong passion for investing, setting up an account with a kid-friendly investing service that will help them grow a portfolio using just “spare change.”

All purchases on a linked card are be rounded up to the next dollar and deposited into an investment account. You can manage it until your kids are old enough to take over.