Universal Child Care Benefit payments: How you can put them to good use

Canadian families will get a big financial boost on Monday when the retroactive payments for the Universal Child Care Benefit, or UCCB, will start to arrive.

In the last federal budget, the government promised to increase the UCCB from $100 to $160 a month for every child under the age of five. They also sweetened the deal by offering a new benefit of $60 a month for children between the ages of six and 17.

The benefits have been in effect since Jan. 1, 2015, but will only begin going out July 20. 

As families prepare to cash in their cheques (worth $420 or $520 depending on each eligible child's age) the CBC's money columnist Rubina Ahmed-Haq has some advice on how to squeeze that money for every penny.

1. Use it on your kids

"This is not shoe money or fancy dinner money, this is money for your child's benefit, so make sure it does exactly that," said Ahmed-Haq.

"I say use it 50-50. Save half, spend half."

She suggests banking the money in your child's Registered Education Savings Plan (RESP).  

"For every dollar you put in an RESP, the government kicks in 20 cents, up to $500 a year, so all of sudden your benefit will represent even more."

You can also grow that money in a high interest, no fee account so that your child can use it for whatever they need later in life, she says.

And when it comes to spending the money, think about your child's immediate needs, such as back-to-school supplies, new clothes and fees for extracurricular activities.

2. Look for tax deductible costs

Consider putting the money toward child care, since parents with children under six years old can claim up to $8,000 of that cost on the lower earning spouse's income, and up to $5,000 for children ages seven to 16.

Doing this will result in a bigger income tax refund, and that money can be used to get even more benefits. 

Many arts and sports programs are also tax deductible.  

"If all of that is covered, ask your kids what they want to do. Try a concert, a day at an amusement park, a road trip, or something else that will make them happy," says Ahmed-Haq.

3. Don't use it to pay down debt

"Don't use this money to solve your money problems," said Ahmed-Haq. Instead she recommends seeing a reputable debt counsellor if you're struggling to make ends meet. 

You can find a list of resources on the Financial Consumer Agency of Canada website.  

Also be aware that the UCCB is a taxable benefit, so the money you receive will be added to your 2015 income. If you are worried about paying that tax bill, save part of the UCCB to cover it. 

Register if you haven't already

The federal government says more than 4 million families are eligible for this benefit, but approximately 200,000 families haven't registered yet.

But it's not too late for them to take advantage of the UCCB for all of 2015. 

Anyone that is a resident of Canada with kids aged 17 and younger can register, provided their tax return information is up to date. The process will take about 80 days.

Visit the Canada Revenue Agency website for more information.