Canadian residents with children 17 years-old and younger are getting a big boost to their bank accounts this week. As promised, The Government of Canada has started paying out the increased Universal Child Care Benefit, or UCCB.
The payments have been in effect since January 1st, 2015, but families are only now starting to receive the money. For families of kids 0 to 5 years-old, the amount has increased from $100 to $160 a month. For families of kids 6 to 17 years-old, there’s a new benefit of $60 per child a month.
On July 20th the retroactive payments were sent out, and families already receiving the $100 benefit for children under 5 will receive $520 in a lump sum payment for the difference. Families of kids 6 to 17 received a $420 lump sum payment. That’s the $60 for the last six months each family has not received (for each child) as well as the new payment for the month of July. If you haven’t received the increased UCCB yet, you probably didn’t register in time. You can still do so by visiting the CRA website, “How Can You Benefit.” The payment will take 80 days to arrive but you won’t lose out on any of the 2015 UCCB payments.
Parents should be aware that this is a taxable benefit. So, next year when you file your tax return, the total amount of UCCB credits your family received will be added to the income of the lower earning spouse. That means you will pay income tax on the money. If you’re worried about a bill to the CRA during tax time, save part of the UCCB money your child receives to prepare for that circumstance.
The UCCB retroactive payments are significant; for bigger families this can mean $1000s deposited in one day! Even for a one child family it’s at least $420. There are some great ways to use that money, and if you're not sure how to earmark it, I have you covered here with Dos and Don’ts of how the money should be spent.
They’re here: the dog days of summer.
The lazy, hazy afternoons you've spent all year waiting for.
But there’s a downside. Are your summer daydreams being interrupted with cries of “I’m bored,” or worse, the “Can I have it?” Keeping your kids busy without blowing your budget can be a gargantuan task in the summer.
I’m not here tell you how to save cash during these hot months. My advice is even better; it's how to use this time to teach your kids about money. A few lessons this summer will keep them busy and makes them better savers in the future.
So why now? During the summer parents generally get more one-on-one time with their kids. They're with you when you're grocery shopping, running errands, getting your car fixed, or going to appointments. They are ALWAYS with you. These are all opportunities to teach our kids about what things cost, how to comparison shop, and be more mindful of where your cash goes.
Depending on your child's age, here’s how to get started:
Parents often look at me like I’m crazy when I tell them I talk to my 3 year-old about money ALL THE TIME. She knows what it means to save money, and she understands enough to respect money. If, for example, an adult gives her a cash gift, slowly she’s learning that you can’t have it all right away. You know how you’re always amazed your toddler can pronounce a super difficult word, or remember the trip you went on a year ago? Well, it’s an indication they can also learn about money. Believe me, learning the first financial steps is not difficult for young kids.
Start slow and easy, and in a meaningful way. For example, help them distinguish between what's free and what costs money. For example, going to the park or library is free. But a trip to an amusement park or to the movies costs money. You can reinforce these ideas by saying things like, "let's save some money and just go to the park today because we spent a lot of money taking you to the indoor aquarium last week."
This is also a great time for them to start understanding how the economy works. When you’re out with them, talk to them about people who are making money, like grocery store clerks, bus drivers, waiters, and doctors. If your child really wants something this summer that you weren’t budgeting for, help them start saving for it. Use a clear jar to add coins and bills to work towards what they want. It can be change you give them, birthday money - any cash they receive. In the end you'll probably pitch in some of your own money, but it teaches kids how to save and be patient to get what you want.
Keep up the talk as they get more demanding. In my opinion, the tween years are the hardest to get your kids to understand the value of money. From ages 6-11 they are old enough to know what they want, but too young to get a part-time job to pay for it.
If your family budget allows, start giving your kids a small allowance. But this doesn’t mean you just hand over cash without getting something in return. Assign responsibility, like having to make their bed every morning and keep their rooms clean. It’s really important for kids to understand that money is earned. How much allowance you give your kids is a personal choice, but in my opinion it's best to associate it with their age. So, $6 a week if they are 6 years-old, and it can go up from there every year. This cuts down on sibling fights as well, as it’s a formula everyone can understand.
Praise your kids if they buy something for someone else with their allowance money. Often kids want to buy a treat for their younger sibling or friends, so let them. It will help them see how money has more than just monetary value, and that spending it on others can bring joy.
As kids enter their teenage years, your years of financial lessons will start to really pay off. It's the perfect time to encourage your kids to get their first job this summer. It can be cutting grass, working at the mall, or baby-sitting. Make sure they know they are making money, and in some cases paying income tax - and that they are a legitimate part of the economy.
If you feel your child is responsible enough you can start teaching the basics of borrowing and lending money. For example, if they have a part-time job and they may want to bike all summer rather than take a bus. You can lend them the money and set a payment plan to pay you back for the bike. Help them find a bike they can afford and not one that will suck up all their income that summer. Set out clear penalties if they are unable to stick to that plan.
This is also a good time to start teaching your kids about the basics of compound interest and how to make their money grow. A good method is the rule of 72. Take 72 and divide it by the interest rate you're receiving. This equals the time it will take to double that investment.
Parents will often say to me, “I know nothing about money, so how can I teach my kids?” But not knowing is not an excuse, because all year long you will dive in and help them with their homework on subjects you know little about, so do the same with money. Also, kids do learn by example. If you are frivolous with your credit card and drowning in debt, they will see that as the norm.
Finally...
The summer is long, so use this time to make your kids more money savvy. Parents of older kids - especially those nearing university life - should start talking about personal details about their finances. Things like their salary, the income tax they pay, how much savings they have, and what the mortgage is at. After all, these different numbers affect your child’s financial situation as much as yours. My goal is to send our kids back to school with great summer memories of family and fun in the sun, but also with some solid financial lessons that will pay off the rest of their lives.
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