woman's hands stacking bills on a white table

How To Make the Most Out of Your Child Tax Credit Payments

The Child Tax Credit (CTC) of 2021 is set to be a game-changer for low-income families with children. The Biden Administration estimates that these new improvements could go as far as cutting child poverty in half, bringing direct payments to nearly 40 million Americans. Monthly advance payments started hitting accounts on July 15th and will continue through the year.


What is the Child Tax Credit?


The Child Tax Credit (CTC) of 2021 is part of the $1.9 trillion relief package signed by President Joe Biden in March. This package increases the credit amount, makes more families eligible, and calls for half of the total credit to be paid out in monthly installments from July to December 2021.


Eligible families will receive up to $3,600 per child up to age 6,and $3,000 per child ages 6 to 17. Half of the total credit amount will be paid in monthly advances, and half will be distributed with monthly payments continue monthly payments are planned into the future.


Half of the total credit amount will be split into 6 monthly payments, sent directly to recipients on the 15th of each month. The other half will be claimed through 2021 tax returns.


Make the Most of Your Payments


If you do qualify, here are some steps to take to use these funds to secure a strong financial future for your child.



  1. Budget Your Payments! — With any new income source, it’s important to factor it into monthly spending. It’s a good idea to budget your credit toward your child’s direct needs. Budgeting out necessities like diapers, food, and school supplies, with a bit for toys and fun purchases, will help spread those extra CTC dollars.
  2. Allow For That Allowance; Teach Your Child The Importance of Money! — While most of the funds will be used for day-to-day support or savings, this is the perfect opportunity to start teaching your child about money. By setting up an allowance with some of the funds, you will be able to teach your child the meaning of money, and the importance of saving vs. spending. This can be as little as a few dollars a month and adds up to a major life skill for your kiddos.
  3. Broken Arms Happen, Keep Some Safe For Emergency Purposes! — No parent will be surprised to hear that kids can get… rambunctious. It doesn’t take much for a day at the park to become a day at the hospital. Having an emergency fund can keep that broken arm from ruining family finances. That’s why we strongly suggest recipients add some of their return to an emergency fund for their child. Add what you can from these monthly payments, and don’t withdraw the cash until a true emergency hits.
  4. Open A Youth Savings Account With Sierra — Of course, one of the most important aspects of raising a child is saving for their future. That’s why we’re standing by to open your child’s first savings account. Get them started to save for college, first cars, moving out, or whatever path your child might take.


The CTC hopes to cut child poverty in half, but remember payments are only the first step. Sign up for an account today, to make the most out of your CTC payments. The Sierra crew is here to help sort through your savings options, and we’re happy to answer any questions.