Toronto parents urged to save after getting new child care money

Toronto parents are split on what to do with some new money after the federal government upped its child care benefits plan on Monday, but a financial advisor is advising them to save it.

The federal government has increased its universal child tax benefit, or UCCB, to give parents more money parents with kids under 5-years-old will now get near $2,000, while parents with children from ages 6-17 will get $720 each year per child.

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The change, which the opposition has blasted as "electioneering", is retroactive,meaning parents who applied for the program will get the extra money dating back to thisJanuary.

John Bathan, a father of two, told CBC Toronto"every penny counts."

New parents Meghan Read and YenaeTesfai will also spend the money soon. "Formula, diapers, it's all very expensive," Read said.

Other parents said the money will go straight into savings plans.

Toronto isone of the most expensive cities in the country to raise children in the country. Last November, a Canadian Centre for Police Alternatives study of the affordability of child care found that Toronto parents pay $1,676 per month for infants under 18 months, $1,324 for toddlers and $998 for preschoolers.

GTA families will be one of the biggest beneficiaries of this program, a Canadian Pressanalysis has found. Three ridings in Mississauga, two in Brampton, Whitby, King-Vaughan, Etobicoke North and Ajax are all among the Top 20 ridings when it comes to how much parents are expected to get from the UCCB.

While the cheques today will be a minor windfall, with some parents netting as much as$520, financial advisors are warning parents to use that money to pay down debts and save for their children's education.

"I would always suggest people pay off non-deductable debt first credit cards, because they come at extremely high interest rate, car loans, mortgages," said Cynthia Kett, of financial advisory firmStewart & Kett.

Parents should also be aware the new UCCB money will be taxed next spring.

The CBC's Michelle Cheung has more on this story in the video above.