Many people are receiving the Advance Child Tax Credit Payments from the IRS, which are an advance payment on the money that you would normally be getting in your 2021 Tax Refund. The stated intention of the payments was to provide ‘relief for working families‘.
However, this is not free money. It is part of your Tax Return for 2021. Be careful because you could end up owing taxes if you take the money now, but then make too much and don’t have enough credits and deductions to offset the taxes.
If you had a very small refund last year or owed money, then you should probably not spend any of your Advance Credit because you may need it to pay your taxes in 2021.
President Biden claims that he has ‘lifted millions out of poverty‘ with his American Rescue Plan, which included an increase in the Advance Child Tax Credits and Covid checks. However, that statement will only be true if people use the money wisely. If people waste the money on junk food, lottery tickets, alcohol, phones, or trendy clothing, poverty will not be improved.
Smart people will be very careful not to waste this money! Think LONG TERM investment, not short-term pleasure.
The most important thing to do is to put some money into a savings account for emergencies. But if you are receiving a large deposit, you could save some and spend some in the following ways to help improve your financial situation.
Here are 12 ways you can put your Advance Child Tax Credit to good use.
- Buy healthy food and vitamins. People in poverty often do not buy the best food. Organic fruits and vegetables, quality meats, and fresh eggs are important to a well-functioning brain. Good health will allow you to think better, work harder and improve your life.
- Pay off high-interest loans such as payday loans, title loans, pawn shop tickets, and car loans. Getting out of debt will do more for you than you think! Being in debt sets a bad example for your children, as well.
- Take care of car and home repairs. Having a reliable vehicle and a safe and well-maintained home is important to your child’s future. Replace broken appliances so you can cook meals at home instead of eating out or buying deli food.
- Replace old mattresses, pillows, and blankets. Having a comfortable place to sleep is important to your health. Mites and mold in old bedding cause allergies and poor sleep. Having a nice bed will improve your and your child’s outlook on life!
- Buy books about how to make money, start a business, invest, and get out of debt. Better yet, borrow them from the library, but make sure they are current. Financial education will help you get out of poverty!
- Purchase tools and lawn equipment that you or your child could use to make money or start a business. These items are assets that will help you increase your future income!
- Buy nice clothes/shoes that can be used for job interviews or work. Wearing professional clothing is very important for making a good impression and it also improves your self-confidence during the interview!
- Take your children on field trips to museums, parks, the beach, the zoo, landmarks, to visit relatives, and other places to enrich their education. This is something that middle-class parents do, but people in poverty often can’t afford. Expanding their perspective will help them see that they can get out of poverty.
- Buy your child running shoes, sports equipment, gym memberships and proper workout clothing so they can improve their health and self-image. And your own!
- Put together supplies for emergencies, such as batteries, a generator, flashlights, warm blankets, plastic for windows, and food. There is no doubt that you will need this stuff eventually. Buy while it’s available and the price is not inflated.
- Musical instruments, art supplies and lessons. Children whose talents are supported will often have better opportunities in the future. Lessons are also available online.
- Other classes, educational experiences and books on topics that can increase your child’s intelligence and job skills, such as coding classes, foreign language, cooking or anything job-related.
Lastly, be very skeptical of investment schemes such as jobs that require you to pay for a kit or book or secret information that promises to make you rich. The only person getting rich that way is the person taking your money!
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