Child Tax Credit Payments Could Stop in 2022 — Replace Your Lost Income With These Budgeting Tips

Parents Carrying Son On Shoulders As They Walk In Park.
monkeybusinessimages / iStock.com

The advance Child Tax Credit has helped to lift more than 3 million children out of poverty, reports say. In summer 2021 when the credit first became available, many families reported spending the funds on various expenses ranging from paying down debt to saving the funds, according to the U.S. Census Bureau.

See: Stimulus Update — December’s Child Tax Credit Arrives in Two Days — Will This Be the Last Check?
Find: Top Money Moves I’m Making Now to Save My Bank Account for 2022

As the school year approached, more parents spent money on school-related expenses like books, supplies and tuition — their own, and their children’s. When school opened in September, coinciding with businesses opening across the country and workers returning to the office, parents started putting the money toward day care. Across the board, the Census Bureau reported, many families spent at least part of the money on food, rent, mortgage or utilities.

The Census data shows that the money quickly became a necessity for many families. The enhanced Child Tax Credit looks likely to remain for the 2022 tax year. But with the legislation still subject to changes, Congress could stop the advance payments, forcing everyone to claim the funds on their tax returns next year instead. In the event the advance installments stop, American families should be prepared to re-work their budgets to account for the loss in income.

Building Wealth

The last approved installment hits bank accounts on Dec. 15. Here are some tips to budget better if you lose that advance CTC in the New Year.

See: Stimulus Update — Child Tax Credit Payments Still Aren’t Getting to Those Who Need Them Most
Find: How Much Money Should You Budget for Home Maintenance in 2022, Based on Inflation?

Review Your Budget To Reduce Non-essentials

The CTC allowed for some perks — for parents and children both — that families couldn’t have afforded without the funds. Keeping in mind that inflation has raised the prices of many items, losing the CTC advance payments now comes as a double whammy.

Evaluate your current income — without the CTC payments — and your expenses. Can you cut any non-essentials? That doesn’t mean you have to entirely stop treating yourself to a specialty coffee or grabbing McDonald’s for the kids between basketball games (especially since the fast-food chain is offering 12 days of freebies through Dec. 24). But if you’ve splurged on multiple streaming services or started eating out more thanks to the extra cash in your bank account each month, it may be time to scale back.

Building Wealth

Consider Consolidating Debt

If you took the opportunity to pay off some of your debt with the CTC payments, your credit score could be looking pretty good right now. Can you eliminate the rest of your debt by consolidating to a 0% introductory interest rate credit card and paying off as much as you can each month during the promotional period? Ultimately, this will free up cash you can use for other expenses. Even if you can only afford to make the minimum payment, at least you won’t be accruing exorbitant interest charges. 

See: McDonald’s Is Giving Out Free Big Macs Today Thanks to a Christmas Retweet from Mariah Carey
Find: How To Approach Budget Differences for Family Gift Exchanges
                                                                                                                                                                

Look For Ways To Reduce Fixed Expenses

You may think of fixed expenses such as utilities and rent or mortgage as impossible to change. But just because they are necessary expenditures doesn’t mean you can’t reduce their costs. Consider refinancing your mortgage while rates are still low to reduce your monthly payments — but weigh the savings against any closing costs your lender charges.

Building Wealth

If you rent, speak with your landlord about negotiating a decrease. You might even offer to take on administrative or maintenance tasks a few hours a month in exchange for a rent reduction.

It also pays to call your cell phone provider to see if there’s a better deal available. And with winter coming, it’s a good idea to shop around for better prices on home heating oil — and check to see if you qualify for the Low Income Home Energy Assistance Program or a similar program offered by your utility provider.

See: 9 Ways To Buckle Down Spending — Even During the Holidays
Find: The 50/30/20 Rule — Is It the Best Budgeting Method?

Increase Your Income

Once you’ve written your budget, you can figure out how much you need to make to maintain the standard of living your CTC payments afforded your family. Can you make up for that money with a second job, a work-from-home gig or a part-time business?

Even if you’re short on time, you may be able to earn extra cash selling items you no longer want on Facebook Marketplace, taking online surveys or even downloading a cash back app like Rakuten to earn money on purchases you’re already making such as groceries.

More From GOBankingRates

Share this article:

Building Wealth

About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.
Learn More