If you are new to parenthood you may not know about the Candian Child benefit, but in oder to start making the most of it, you should make a plan for your money before it starts arriving in your account. This post is all about the ways that you can use the CCB to benefit your family the most.
What is the Canadian Child Benefit (CCB)? The CCB is a beneift paid out to Canadian parents to aid in the expenses of raising children in Canada. There is an amount allocated per child, with the maximum benefit being paid out before your child turns 5, but continues until the child is 18 years old.
How to best use your CCB to maximize stability for your family:
- Use it to start an RESP
- Pay down your debt
- Sign your child up for sports or lessons
- Save it for school needs
- Use it to cover dental or optometry
- Keeping your head above water
This post might be a polarizing one, as people who are receiving the CCB tend to be very opinionated about how that money is meant to be spent. However, this post is not intended to past judgement, but to present some alternative ideas for ways that this benefit, actually is a benefit to your family.
Keeping your heads above water
The very first way that this money could be put to best use is to keep your family sheltered, fed and warm and secure. If you are struggling with your finances and you are struggling to stay current on bills, or to even find housing, this is the perfect thing to use this money for.
Listen, the Canadian government is aware that many families are facing an uphill battle when it comes to finances, and the people with the lowest income are pulling in the biggest benefits checks.
You MUST have submitted a tax return for the previous year, even if you did not make an income. They need your income amounts as it will be the number that determines how big of a benefit you and your family will be receiving.
If you are unsure how much you might be receiving for the Canadian Child Benefit, you can find a benefit estimator and calculator here. You will need some information about your last tax return, and if you haven’t filed for tax returns in the year prior to applying, you will need to complete one before they will start the program.
In BC they have made this process very simple to apply into as you are filling out your birth certificate for your child. If you have become a parent or guardian through other means, there is more specific information here to see if you qualify or to apply into the program click here.
Pay down your debt
Debt puts your family at unnecessary risk. Instead of using your money to build wealth and stability, your extra money is going to pay interest to your creditors.
According to the Federal National Reserve, ” 44 percent of all respondents [in the USA] could not cover an unexpected $400 emergency expense or would rely on borrowing or selling something to do so.” How scary is this statistic? Last year at this time our family would have been in that same boat, and in fact we were, and it went on the visa.
Start an emergency fund if you don’t have one
This year we have an emergency fund in place, and we now have $1000 as a cushion to protect us from something like needing to use an ambulance, or even a simple blown out tire on a vehicle.
This is step one in our plan to pay off all of our debt started with a $1000 emergency fund, and I cannot even begin to tell you how beneficial this single action has been. It has brought a certain level of peace as we are slowly gaining control over our finances.
Ultimately your goal should be to have a least 3-6 months of expenses saved up and put away for a rainy day. People may scoff at tucking that money away in something that isn’t specifically designated for your kids, but honestly, what better way to create security for your children, than to be prepared in case life hits?
** If you want to read more about the plan we are using to pay off debt, you can read morehere.
Save it for current education expenses
This is the perfect bit of income to be setting aside to use for your children’s school needs. If you have never heard of sinking funds before, they are a savings accounts with a specific purpose. Find a way to set this money aside and not use it until it is needed.
If you are curious about how our family makes sinking funds work for us, you can learn more here.
Pay for extracurricular activities such as sports, music lessons, art classes, summer camps, ect.
If you are looking for ways to get your children involved in activities, this might be one way to make them affordable for your family. These are the types of things that this benefit is meant to be covering, so make the most of it.
Pay for childcare
If you are living in a province where daycare costs are not regulated by the government, they can add up really quickly. If you are looking to go back to work, this might be something that helps to subsidize your daycare expenses and get you back to work, without daycare costs dipping into your regular income.
Use it to cover medical expenses
While the majority of immediate health care costs are covered in Canada, some dental, optometry, chiropractors and physiotherapy are not.
Many of us don’t have benefits through work, or if we do, they do not cover the complete expenses of treatments, medications or therapies. If you are anticipating that your child has any significant needs that may not be covered by other means, than it is good to start thinking ahead and using your CCB to meet those needs as they arise.
By saving for these needs before they arise, it helps to keep the stress out of the situation, but also helps you keep from pulling out your credit card to manage the expense.
Open up an RESP
An RESP is a Registered Education Savings Plan and an investment account that houses money intended for your child’s future education costs. Many people start these funds as soon as their children are born, others may choose to wait, or some may not do them at all.
You will need to decide how your family will choose to navigate your child’s post secondary education. Will you pay for their college in full? Will you help them some, but not with the complete expense? Will you allow your child do pay for schooling independently? The sooner you make these decisions, the longer you will have for an RESP to give you returns on your investment.
Deciding early on in your child’s life how you plan to financially support (or not) your kids, will help you maximize the amount of money you are able to set aside for your child’s school when the time comes for them to go.
Some considerations for RESPs
The government will contribute up to twenty percent match of your contributions, possibly more if you are a low income family. There is a cap to this, but because I have seen several different numbers floating around, this is best discussed with an investment professional, of which I am not.
There are a few education grants that you may be eligible for depending on which province you are living in, your income, and how much you are contributing. With the government also contributing to the these accounts they do seem to have good growth, and might help you get ahead more quickly than you could on your own.
I am obviously not an investment professional, so it would be wise to seek one out and discuss the best investment and saving strategies for your child’s education.
Something that I have learned through this past year, is that you truly do plan to fail when you fail to plan. I 100% guarantee you that if you do not make a plan for this money, then it will simply disappear and you won’t even be able to say exactly where it went.
I know, because, while I have a really great handle on our money now, I am guilty of not managing this money better in our own family before last year.
Find a good strategy that works to keep that money working for your family, instead of allowing it to vanish. I have written in depth about sinking funds, and this may be one of the perfect things to set up as a direct deposit into a completely separate bank account so that money is allocated where it needs to go to set your family up for success.
I am curious, do you have a plan for how to use your Canadian Child benefit? If not, what is holding you back? Let me know in the comments below.