Since July, parents all over the country have been enjoying a monthly windfall in the form of the boosted Child Tax Credit. This year, the credit is worth up to $3,600 for children under the age of 6, and up to $3,000 for those aged 6 to 17. While the credit is normally paid as a lump sum in the form of a tax refund, this year, half of it is being paid in monthly installments from July through December.
Initially, lawmakers were hoping to extend the boosted Child Tax Credit well beyond 2021. At this point though, it’s looking like that boosted credit may only be in place for another year at most. There’s also a chance it won’t last past 2021. As such, it’s important to make the most of those bigger monthly payments while you’re still receiving them. Here are some smart things to do with that money.
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1. Pad or build an emergency fund
Having a financial cushion can help you avoid stress — and debt — when unplanned bills strike. It’s a good idea to have enough money in your savings account to cover three to six months of essential bills. If you’re not there yet, it’s a good idea to stick your two remaining payments — the ones coming in November and December — into the bank.
2. Pay down credit card debt
Owe money on credit cards? The sooner you get rid of that balance, the less interest you’ll pay. If you’re all set with emergency savings, you can use your incoming Child Tax Credit payments to whittle down your debt pile.
3. Sock money away for the holidays
The holidays will be here before you know it, and the last thing you want is to have them be a source of debt. You can use some of your Child Tax Credit money to cover expenses like gifts, travel, and decorations.
4. Boost your retirement plan
Many people struggle to save for …….