Got kids? The Canadian federal government wants to give you more money. The Canadian Child Benefit (CCB) replaces the Canada Child Tax Benefit, the Universal Child Care Benefit, and income splitting. It’s a more straightforward plan to understand and distribute to families in need. In July, The Liberal government announced CCB payments will be adjusted to cost of living increases. Here are some ideas on what to do with the extra income.
The CCB operates on a sliding scale paying the lowest income households the most amount of money. It decreases with higher income households, who may not qualify at all. Here is the government’s handy calculator to help determine where you sit on the scale.
Prime Minister Trudeau said raising kids is expensive and we don’t disagree. “The CCB is in place to put healthy food on the table,” he continues, “help pay for summer programs, as well as before and after childcare during the school year. You could buy dance lessons, cleats for an aspiring soccer player, or warm winter boots.” Principally, the extra money should be directed to the benefit of your child, not for your personal use.
It’s amazing the confidence boost and peace-of-mind a little extra money can give you and your kids. If you can spend more on your kids, tax-free, do it, and help brighten their day. If they have everything they need – if you’ve paid for camps, if you’ve budgeted for before and after school care, and there’s still some left over, here are some other ideas where you can spend the benefit.
Are you maxing out your child’s Registered Education Savings Plan?
Your child’s RESP will help put them through post-secondary programs after high school graduation. On top of your contributions, the federal government matches up to $500 under the Canadian Education Savings Grant. If you haven’t set one up yet, now is the time. If you do have it set up, why not put a little more money towards it? Legendary investor Warren Buffet has a quote, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” Plant the seed and give your child some relief from any financial stresses in the future. Student debt is a growing concern.
Start a new savings account and create a teachable moment
Ratehub has a free-to-use savings calculator. You can start saving for more significant items your child may need. A new bike? A computer? Are they begging you for a smartphone? It’s an excellent opportunity to teach them the benefits of saving up for something they really want. The importance of teaching your child patience and delayed gratification can’t be overstated.
Tax-Free Savings Accounts for the holidays
December is a month where expenses can get out of control. An extra bottle of wine, a little bit more in the stocking, and one more gift never hurt anyone, right? It all adds up. Why not create a mini safety net for when January rears its ugly head? TFSA’s earn a higher interest rate than a regular savings account. Ensure your family holidays are stress-free and enjoyable knowing there’s a little bit of extra cash stowed away.
Avoid lifestyle inflation
The extra increase in the child benefit is found money. It’s money you weren’t expecting. It’s a bonus. If you earn an extra dollar, great. Don’t get into the habit of spending two if you can invest the second dollar while still living on the first. You’ve created a budget, know your limit, and spend within it.
Above all else, your child needs safety and to be loved. Invest now and help them live a life with a little less worry. Protecting them a little bit now pays dividends in their future. Use your updated CCB wisely. Happy parenting!
- Why you should set up a savings account for your child
- TFSA vs. RESP
- 3 ways to manage holiday spending without breaking the bank
- How to fight lifestyle inflation