Monthly Child Benefits Start in July 2021

 As reported by Jeff Stein in the Washington Post (May 17):

"The Internal Revenue Service will on July 15 start delivering a monthly payment of $300 per child under 6 and $250 per child 6 or older for those who qualify. The monthly benefits will be deposited directly in most families’ bank accounts on the 15th of every month -- or the closest day to that date, if the 15th falls on a holiday or weekend -- for the rest of the year, without any action required. For instance, an eligible family with two children aged 5 and 13 will receive $550 from the IRS directly to their bank accounts on or close to the 15th of every month from July to December." 

Fully 88% of U.S. kids qualify, with only the most wealthy not receiving the benefit. "The credit diminishes for individuals with adjusted gross income of more than $75,000, as well as couples earning more than $150,000."

Until now the U.S. has had one of the highest child poverty levels among rich nations. The Biden administration is addressing this problem with this policy initiative. 

How to use this money? For low income families, the money can be used to reduce debts, pay for child care, tutoring, summer activities while parents work and simply to improve the family's living standards.
Ideally parents can use some or all of the money to invest in their child's future by opening a 529 educational savings plan. The money grows tax-free and proceeds can be used to pay for post-secondary education as well as K-12 education. 

How a kid’s allowance can teach money management skills

"Teaching children about money management is a big job for parents. Money talk often starts by paying an allowance. According to new research from the American Institute of CPAs (AICPA), two-thirds of parents (66%) give their child an allowance at an average of $30 a week. An allowance is just part of a larger conversation about effective financial management. Parents must make sure the lessons sink in."

"The good news is that nearly half of parents (49%) say they take time to teach their child about money at least once a week. However, nearly a third (32%) say they only teach their children about money no more than once a month, including the 7% who admit they never teach their kids about money."

Of course, much of what children learn about money management from their parents comes from daily observation. Parents who think they don't teach their children financial lessons are kidding themselves.

The article explains how parents can make decisions about how much allowance to give, which should vary with age. Ideas on how to teach children prudent money skills are also addressed. Check out: https://blog.aicpa.org/2019/10/how-a-kids-allowance-can-teach-money-management-skills.html#sthash.ymIVwxYO.dpbs

ID theft targets children

The Wall Street Journal (by Yuka Hayashi, 8/29/18) reports that a new federal law going into effect in September 2018 will make it easier for parents to check a child's name and freeze their credit to combat the growing problem of ID theft of children.
"A child's Social Security number can be used by identity thieves to apply for government benefits, open bank and credit card accounts, apply for a loan or utility service, or rent a place to live. Check for a credit report to see if your child’s information is being misused. If it is, visit IdentityTheft.gov to report and recover from identity theft."
Read about Child Identity Theft
https://www.consumer.ftc.gov/articles/0040-child-identity-theft

Do you have a child with special needs?

"Clients who have a child with special needs face 'a special set of financial considerations,' writes Brooke Hawley, a financial adviser and mother of a child living with special needs. The most important thing to do, according to Hawley, is set up a special needs trust in the child's name."
Check out this excellent article: https://www.wealthmanagement.com/client-relations/speaking-experience-financial-planning-special-needs-families

Are your children ruining your retirement prospects?

"Raising children has never been inexpensive. But the costs go well beyond daycare and college today, extending far into young adulthood—and that could pose a problem for parents’ retirement plans.
Parents spend $500 billion annually on their adult children—about double what they put into their retirement accounts, according to a study released on Tuesday by Bank of America Merrill Lynch and aging consultancy Age Wave. Nearly 80% of U.S. parents give some financial support to their early-adult children...." Get the details from Reshma Kapadia, writing for Barrons: https://www.barrons.com/articles/urban-outfitters-stock-run-isnt-done-quite-yet-1538495424

 

Financial planning for special needs children

"Parents face many challenges when they must balance long-term planning for a special-needs child with their own retirement savings, experts say. Certified financial planner Mary Anne Ehlert says crucial factors for special-needs families include investment allocations, government benefits and estate plans." (Retirement Security Smartbrief). Morningstar contributor Mark Miller explains government assistance available to special-needs family members, how to use ABLE accounts, and how to balance retirement investing needs with ensuring long-term financial security for a special needs child. Read the details at: http://news.morningstar.com/articlenet/article.aspx?id=787787

Financial Resources for Parents from CFPB

RESOURCES FOR PARENTS

Parents and caregivers want to put their children on a solid path to a bright financial future – but they’re not always certain about what to do and when. The CPFB has launched the new Money As You Grow Web site, where we provide a framework for how children develop financially, along with activities and conversation starters parents can use right away.  You can share these resources with your clients who are parents, or integrate them into programs you may be offering for children and youth. 

1.  Early childhood resources

In early childhood, it’s a little too soon for children to understand abstract financial concepts. Still, they are practicing skills and attitudes that will serve them well in school and in the future: planning and problem solving, staying focused, and waiting for what they want.

Parents can use resources such as the Money sort and Pretend play activities to help children learn about earning, saving, planning, and shopping.

2.  Middle childhood resources

In middle childhood, young people start to pay attention to the financial world around them. They start to absorb habits and attitudes about what’s typical and what’s popular. Peers become important – but their parents are still the most important influence on their financial world.

Parents can use resources such as Bingo on the Go to engage with their kids around financial topics.

3.  Teen and young adult resources

Teens and young adults start to earn money and make financial decisions on their own, learn how to find and apply useful information, and make choices about their future. Adult supervision, guidance, and feedback are important in helping teens learn to navigate these experiences successfully.

Parents can use resources such as the Family members’ jobs tool and College Scorecard to help teens research and understand college and career options. 

Planning for the cost of children

"The U.S. Department of Agriculture's handy, terrifying Cost of Raising a Child Calculator told me that the average two-parent household in the U.S. earning less than $61,530 a year spends $11,850 to raise a child in his or her first year. Such a big number might make you think that having a baby is impossible financially." Read the details from Brianna McGurran, a writer for NerdWallet at http://bigstory.ap.org/article/88fff6cd6c6a4f2fba756889f284b64f/ask-brianna-how-can-i-afford-have-kids

Pay your kids to eat vegetables?

Study finds short-term cash incentives yield more-healthful eating habits in the long term as reported in The Wall Street Journal by Beckie Strum, Oct. 16, 2016.  "The strategy not only works in the short term, but can create healthful eating habits in children in the long run if the little bribe is carried out consistently for several weeks, according to a study published earlier this year in the Journal of Health Economics." For a year and a half, the researchers carried out a study of 8,000 children at 40 elementary schools. Students who ate at least one serving of fruit or vegetable at lunch received a 25-cent token redeemable at the school’s store, carnival or book fair. “These small incentives produced a dramatic increase in fruit and vegetable consumption during the incentive period,” the researchers wrote. “This change in behavior was sustained.”"Two months after the incentives ended, many more students than before the program started were still eating a fruit or vegetable at lunch.The effect was even greater for schools that implemented the program for five weeks." (quoting from WSJ)