How to Use Your Child Tax Credit Money

How to Use Your Child Tax Credit Money

This past summer, the IRS started to send monthly advance Child Tax Credit payments to millions of American families. Most working families are receiving $250-$300 per child per month because of the federal Child Tax Credit. If you qualify for this money, you probably have been receiving a direct deposit or check from the IRS on the 15th of each month, starting from July 2021.


The Child Tax Credit is intended to help the families of 88% of American children pay for the costs of raising their children, and has been projected to help cut child poverty by more than half. But if your family already has some stability in your monthly finances, this Child Tax Credit money could be a good opportunity to plan for your children's future and give your children some extra spending money.


Here are a few ideas for how to use your Child Tax Credit money in a way your kids will appreciate—now and into the future.

Give Mom and Dad the First Chance to Manage the Money

If you have two children, ages 10 and 12, you might be receiving $500 per month in automatic payments from the Child Tax Credit. Parents should think carefully about how to use this money to support your children's short-term and long-term needs. For example:

  • Medical necessities: Does your child need braces? Put the money into a dedicated savings account or Health Savings Account (HSA).
  • Everyday needs: Is your family vehicle starting to break down, or are your kids outgrowing your current car? Make a plan for how you can apply the Child Tax Credit to save for a down payment on a much-needed new vehicle.
  • Planning for the future: Have you started to save for college for your child? Consider using this monthly money to set up a 529 college savings fund.

Start by looking at your child's immediate needs and future goals, and use the Child Tax Credit to support them.

Next: Give the Kids a Chance

Talk to your children about the Child Tax Credit. Do they know that the federal government is sending them money every month? Use this as an opportunity to talk with your kids about saving, spending, giving, and short-term and long-term financial goals.


Discuss with your children ideas for how this Child Tax Credit payment could help them learn to manage money.

  • Automatic allowance: What if you could give each child a portion of their monthly Child Tax Credit money as an allowance? Think of it as a “free" automatic allowance from the federal government, and work with your child to make a money plan to use it responsibly.
  • Save some, spend some, give some: Talk with your child about how to use their Child Tax Credit money. For example, if you give your child $75 per month from the Child Tax Credit, you could encourage them to put the money toward three goals: spend, save, and give away. What if your child could put $25 toward each of these goals? Or maybe spend $40, save $20, and give away $15? A GoHenry debit card that you load with the funds is an ideal way to manage and monitor their money allocation.

A family with two kids over the age of 6 might receive $500 per month from the Child Tax Credit. This is a significant boost to many families' monthly budgets, and it's a great chance to teach your kids valuable lessons about money. Earmark the money toward your family's most important goals for your children, and also consider giving your kids some freedom to make decisions about this money for themselves.
Written by GoHenry Published Oct 25, 2021 ● 5 min. read