Monday, 29 June 2015

Enhanced UCCB: How Will You Spend It?

Th Universal Child Care Benefit (UCCB), a taxable benefit paid to all Canadians with eligible children to assist with the cost of child care and child rearing, is set to increase in July.

Until now, the UCCB consisted of one hundred dollars per month for eligible children under six years old. Effective January of 2015, the UCCB was enhanced to include an additional sixty dollars per month for all eligible children under the age of seventeen. This enhanced benefit was not scheduled to begin payment, however, until July of 2015 - which means that next month, families across Canada will receive cheques or deposits reflecting these sixty-dollar-a-month payments retroactive to January.

Anyone with children knows that sixty dollars per month is laughable when it comes to making a dent in child care costs - here in the Greater Toronto Area, sixty dollars would cover roughly one day of daycare - but sixty dollars is sixty dollars. It's a lot more than zero dollars.

So how can families make their sixty dollars per month count?

For some, the money will just get folded into the normal monthly budget - when you're living close to the line as it is, every cent counts toward making those dollars stretch to the end of the month. For others, the money may be just what they need to meet a goal on their wish list for their kids - piano lessons or sports fees or swimming classes or extra math tutoring.

RESP's are a great way to ensure the money stretches as far for your kids as it possibly can - if you don't have one started, set one up; if you're not maximizing your contributions, top it up. Particularly if that sixty dollars isn't necessarily needed for your regular budget, dropping the money straight into an education savings plan ensures that your children get the greatest long-term benefit out of the payment.

The retroactive payment model provides parents with a unique opportunity to really make the most of the benefit. While sixty dollars may not seem like an awful lot extra when dropped into a monthly budget, four hundred and twenty dollars is. (The July payment total for one child, which includes retroactive payments for January through June as well as the first regular monthly payment). Four hundred and twenty dollars could make a real dent in your debt repayment, could make a difference in the house downpayment you've been trying to save up, could pay a full year's worth of your child's recreation activity fees, could set up that education savings plan you've been meaning to start for years.

Because we are debt-free other than our mortgage and already cover all monthly expenses for our family within our monthly budget - both wants and needs - our UCCB will be dropped directly into our kids' RESPs. Though their education funds are already quite healthy and we are on track to be able to pay for their post-secondary education, we feel we can't be too safe - and this extra sixty dollars per month will bring us just that level of comfort we'd prefer.

How will you spend your lump sum UCCB payment in July?

How will you spend your $60/month going forward?

(Originally published as "How Will You Spend Your UCCB?" on my weekly column at gailvazoxlade.com)

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