Financial coach advises families to prioritize immediate needs with child tax credit

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DES MOINES, Iowa — The new child tax credit under President Biden’s American Rescue Plan went into effect last week. Iowa families with a household income under $150,000 a year will be receiving up to $300 per child each month until December. 

A financial coach at the Polk County Financial Empowerment Center, Michael Hardat, said that everyone’s situation is different. However, Hardat says the biggest priority should be taking care of a child’s immediate needs, and many families right now are struggling to find adequate child care.

According to a recent report from the Iowa Child Care Resource & Referral, 28 percent of Iowa cities are considered child care deserts. This makes getting a child into daycare more competitive and as a result, more expensive. 

The Iowa Department of Human Services reports that child care for an infant is nearly $900 per month. Federal census data suggests that’s almost 18 percent of the state’s median income. 

With families receiving $300 per child until December, Hardat said allocating this money toward child care every month could give families some peace of mind.

“It’s going to give us that reassurance that our children are safe and are taken care of, they’re in a safe place, they’re in their daycare,” Hardat said. “Parents should feel relieved that you don’t have to go find alternative ways to make sure you’re paying for your children’s daycare.” 

After taking care of a child’s immediate needs, Hardat suggests families then work to pay off debt and/or create an emergency fund or set aside money for a long-term goal such as college savings. 

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