If you are eligible, you may have recently received your new Canada Child Benefit (CCB) from the Federal Government right into your bank account, or may be expecting it soon in the mail. Depending on your household finances, you may find yourself with more money than you had been receiving under the old Universal Child Care Benefit (UCC). The aim of the CCB is to help defray the costs of raising children under the age of 18.
Quick Facts about the CCB
- The Canada Child Benefit replaces the old Canada Child Tax Benefit and Universal Child Care Benefit
- If you’ve been receiving these benefits in the past and you filed a tax return last year, you don’t need to reapply. Your income from that tax return will determine how much money you are eligible to receive now
- Unlike the old UCC payments, the CCB is tax-free
- Families with children under age six will receive an annual tax-free benefit of up to $6,400 per child. Families with children between the ages of six and 17 will receive up to $5,400 annually. Households with children that have an annual income below $30,000 will receive the maximum payment
“When the budget is tight, having a little extra money at your disposal can be tremendous boost to help cover household costs,” says Jeffrey Schwartz, executive director, Consolidated Counseling Services of Canada. “However, to really derive the benefit of this extra cash flow, you’ve got to plan ahead for its use and avoid the temptation to treat it as ‘found money’,” says Schwartz.,
“Once you’ve determined the amount that you’ll receive monthly throughout the year, tweak your budget to address areas that need improvement,” says Schwartz.
Here are some tips on how to wisely use that new tax credit to give your bottom line a boost.
Those expensive kids
With the cost of food, clothing and other life necessities, no question raising kids is expensive. Take advantage of the intention of this tax credit by applying the money to costs specifically for your kids- whether it is for child care, school supplies, sports, entertainment or extracurriculars and leave the credit card in your wallet.
Drip on that debt
If you’ve got your cash flow reasonably covered, take your monthly cash injection and use it as a tool to aggressively pay down any existing debts. Pick your highest interest bearing card first and apply it there. You’ll be surprised how every little extra bit whittles down that debt even faster.
With high student debt becoming a necessary evil for many students given the high costs of post-secondary education, you can help your child most by reducing the need for that debt. Set up a savings account for their education or take advantage of more government financial support through an RESP.
Cash for credit
When do you most often reach for your credit card? Out shopping? Dinner out? Summer vacation? Date night? Christmas shopping? Pool the cash in a special account to cover those “extras” so that you can keep your debt load down.
Do you struggle with the costs of raising a family? Is living paycheque to paycheque causing you to rely on debt more than you should? We can help you get back on track. Contact one of our trained credit counsellors at 1-888-294-3130 or visit our free online debt analysis.