Bank accounts of parents across Canada saw a sizeable injection of cash this week, as the revised Universal Child Care Benefit came into effect.
Previously, under the Universal Child Care Benefit (UCCB), parents received monthly payments of $100 per child under the age of 6. Now, those payments have increased to $160 per child under the age of 6. In addition, parents of kids between the ages of 6 and 17 will receive now also receive monthly UCCB payments, in the amount of $60 per child, for a total of $720 per year. The UCCB is not based on income, so all families with kids 17 and under are eligible to receive these payments.
This week, families received a lump sum payment of the retroactive amount for the period of January to July 2015, which works out to a payment of $420 per child.
While it’s called a Child Care benefit, in reality the funds do not need to be used for childcare at all. Parents can ultimately use the money for whatever they want. If your kids are still young enough to need daycare after school or babysitters when you go out, then the payments can help offset some of those costs. If not, anything from camps to gas money to buying extra groceries is fair game – and if you’ve got a growing tween or teen, extra grocery money can certainly come in handy!
If you haven’t already spent your lump sum, below you will find some suggestions for putting the extra money to good use. If you have already spent or allocated your lump sum, you can also use these suggestions for spending the monthly amount you will be receiving starting in August. (Keep in mind that the UCCB is a program of the Conservative party and there is no guarantee it will continue indefinitely. It is expected that the program will be discontinued or changed significantly if the NDP or Liberals are elected in the fall election.)
How to spend your Universal Child Care Benefit payments:
1. Contribute to an RESP
We all know the costs of post-secondary education keeps going up and up. If you already have an RESP (Registered Education Savings Plan) set up for your kids, then the UCCB money can help boost the amount available when they are ready to go to college or university. Don’t forget – the government will contribute an extra 20-40% of your RESP contributions, depending on your income, with the Canada Education Savings Grant, up to a maximum of $7200 per child.
If you don’t have an RESP set up yet, what are you waiting for? In addition to the Canada Education Savings Grant, many families also qualify for up to $2000 in FREE money from the government, from the Canada Learning Bond.
For more information on RESPs and government grants, check out smartsaver.org – they’ve got everything you need to know about RESPs and options for setting up no-fee / no minimum contribution RESPs with a variety of financial institutions.
2. Pay for camp or extracurricular activities
The extra UCCB money can come in very handy to help pay for your son or daughter’s summer camp or extracurricular activities throughout the year. Use it to help offset the ongoing costs of their favourite sport, sign them up for music or dance lessons, pay for a specialized camp that you couldn’t really afford otherwise or let them try out a new activity they’ve been interested in. Recently paid for any of the above and used your credit card? Use your payment to pay off the debt to avoid interest charges.
3. Let your kids spend it
It may be hard to believe, but it won’t be long before your tween is old enough to move out and make their own financial decisions. Financial education at school is quite lacking, so as parents we need to help our kids learn how to manage money and spend within a budget. The UCCB payments can provide a wonderful opportunity to teach your kids some financial lessons, while they’re still young enough to listen to your advice. Why not give them some or all of the money to spend, within certain parameters? Set a budget for their back to school supplies, new clothing or technology and have them decide how to use the money in the best way. You can also use the monthly UCCB payments to provide kids with spending money for the month, to avoid having to keep shelling out money for school lunches, treats, apps, and other incidentals.
4. Invest it
Maybe you want to put aside the money for your child’s future, but not sure you want to earmark it specifically for education? There are plenty of options available to invest either the lump sum or the monthly payments. You could set up a Tax-Free Savings account, a mutual fund account or even purchase individual stocks and setup a Dividend Reinvestment Program. This is a great opportunity to teach your kids about saving or investing for the future, so get them involved in deciding where to put the money.
5. Donate it
Want to do some good? Donate some or all of your UCCB payments to a worthy cause. If you donate to a registered charity or political party, you will receive a tax credit for next year’s taxes – something that you may want to think about, considering the UCCB payments are considered taxable income. Again, this is a great teaching opportunity for kids, so why not get them to help you decide which charities to donate your money to?
How are you spending your Universal Child Care Benefit money?
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About Kathy Sima
Kathy is a blogger and freelance writer and mom of two teens who gave up her career as a financial advisor when her son was diagnosed with autism at age 3. When it comes to parenting, Kathy truly believes there is strength in numbers and knows that sharing stories and strategies with other parents has helped keep her sane (so far!)