Child Tax Credits Aid Families in Meeting Basic Needs
Food and healthcare spending increased for those in need
Chicago, IL – November 16, 2021 – The Financial Health Network, the nation’s authority on financial health, with support from the Citi Foundation and additional funding from Principal Foundation, today released the fall quarter Financial Health Pulse Points focused on a review of individual financial transaction data on the child tax credit program. The findings show that child tax credit recipients saw a monthly inflow of nearly $500 which was subsequently spent, largely on household necessities. In fact, families that reported experiencing food insecurity or difficulty paying for healthcare used the funds to purchase food and seek healthcare.
Top-line findings:
- Median monthly inflows rose by approximately $500 for child tax credit recipients.
- Individuals who indicated that they previously experienced food insecurity increased their average monthly spending on food by $345 (49%).
- Recipients who experienced difficulty paying for medical or prescription expenses increased their monthly spending on healthcare from $42 to $72 in the three weeks following receipt of child tax credits, a difference of 72%.
- Recipients are spending most of the tax credit and do not appear to be using the funds to build their savings, a contrast to how stimulus payments were utilized by many.
“These findings show that government interventions for the most vulnerable work, offering an essential buffer to help households meet their most basic needs,” said Thea Garon, senior director of the Financial Health Pulse at the Financial Health Network. “If the Child Tax Credit program continues, families will be able to count on these funds, increasing their quality of life and potentially helping them meet longer-term goals like savings.”
Pulse Points offers regular, timely updates on financial health in America using account and transaction data from the Financial Health Pulse. These briefs supplement the annual Pulse Trends Reports released each fall, which highlight broad trends on the financial health of Americans and how they spend, save, borrow and plan. Analysis for the Pulse Points is based on transactional and account data from approximately 500 members of USC’s consumer panel who agreed to share their data through a secure platform that leverages Plaid’s API.
About the Financial Health Network
The Financial Health Network is the leading authority on financial health. We are a trusted resource for business leaders, policymakers and innovators united in a mission to improve the financial health of their customers, employees and communities. Through research, advisory services, measurement tools, and opportunities for cross-sector collaboration, we advance awareness, understanding and proven best practices in support of improved financial health for all. For more on the Financial Health Network, go to www.finhealthnetwork.org and follow us on Twitter at @FinHealthNet.
About the Financial Health Pulse
The Financial Health Pulse is supported by the Citi Foundation, with additional funding from Principal Foundation. Since the inception of the initiative in 2018, the Financial Health Network has collaborated with USC’s Dornsife Center for Economic and Social Research to field the study to their online panel, the Understanding America Study. Study participants who agree to share their transactional and account data use Plaid’s data connectivity services to authorize their data for analysis.
