Advance Child Tax Credit: Your Opportunity to Get Ahead

July 7, 2021, 9:50 am | Barb Wollan

dollar sign with scaffoldingAMES, Iowa -- The expanded amount and eligibility for the 2021 Child Tax Credit, combined with the advance monthly payments which begin in July, offer families an opportunity to improve their overall financial well-being, according to Barb Wollan, a human sciences specialist with Iowa State University Extension and Outreach. Wollan urges local families to plan for the use of the funds before they arrive.

For six months, July through December 2021, most families will receive a payment equal to $250 per month for each child who will be under age 18 on Dec.31, 2021. The amount is $300 per month for children under age 6.

“Those extra funds can have a big impact on a family’s financial security and possibly help reduce any stress they may be feeling if they are currently behind on bills or short on income,” notes Wollan, who specializes in family finance.

Before making special purchases, Wollan encourages families to focus on increasing their financial security and suggests four top strategies:

  1. Use the funds to get current and/or stay current on all household expenses (rent, utilities, child care, etc.).
  2. Build a savings cushion to provide funds in case of unexpected expenses such as car repair or appliance replacement or job cutbacks. Wollan suggests an initial savings goal equal to one month’s income, and when that is reached, gradually building it to an amount equal to three to six months’ income or more.
  3. Save ahead for upcoming expected costs such as back-to-school, holidays or property taxes.
  4. Pay off debt, especially debts with high interest rates.

However, Wollan says that it is often wise to build a savings cushion even before all debt is paid off. Without that savings, every unexpected expense simply creates more debt and more stress.

For families who are already very secure and stable, the four suggestions above may not apply. In that case, Wollan says, “This extra income offers a terrific opportunity to invest for long-term goals such as children’s education or retirement. Even small amounts of money can grow dramatically over time.” 

For example, if a 35-year-old invests $250 in a tax-advantaged retirement account earning 6% annually for just six months, that amount will exceed $11,000 by the time the person reaches age 70. If the person is able to continue investing $250 per month until age 70, the account value will reach over $92,000.

A starting point for those wishing to invest for their children’s education is to check out Iowa’s tax-advantaged 529 account at For those wishing to work toward retirement, a first step is to ensure they are taking advantage of any available match offered through their employer-based retirement plan. For more information about using the Advance CTC to get ahead, go to or contact your ISU Extension and Outreach county office.

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