There will not be an economic stimulus check this year, at least not like last year’s economic stimulus check. No, this year’s stimulus is different. Instead of receiving a check, the Treasury Department has instructed employers to reduce the amount of taxes they withdraw from each paycheck. Starting April 1, you will start seeing a little extra money in your paycheck – about $45 per month for a single tax filer.
Making Work Pay tax credit
The 2009 Economic Stimulus Recovery Bill includes a section called the Making Work Pay credit, which gives working families a $400-$800 earnings credit. But instead of sending out checks like last year, the government decided that withholding fewer payroll taxes would be a more efficient way of giving people a tax break. It should be automatic, so there won’t be confusion about when checks go out and the Treasury won’t have to print and mail checks (that was a fiasco!).
Pros and cons of the Making Work Pay tax credit. The downside is that most people won’t notice they are bringing in more money each check and many will fritter away without a second thought. The positive is that it forces people to save their money if they want this tax credit to make a difference.
What can you do with an $11 per week tax credit?!
The same thing you can do with a check for $400, but you need to make sure you save the money instead of letting it slip through your fingers each week.
Pay yourself first. $11 each week isn’t a lot of money, but then again, Rome wasn’t built in a day. Even small savings can grow large if you save consistently.
I challenge you to save your Making Work Pay credits. You will begin receiving the extra stimulus money starting April 1, 2009. You might not notice a big difference at first – after all, it is easy to miss $11 per week. But because it is so easy to miss is the reason you should save it!
$11 per week is less than $2 per day. If you can do it, set up a system to automatically save that money each week. Automatically transfer it to an online high-yield savings account where you can earn interest on your savings, or place it in a piggy bank at home. It doesn’t matter; just save it! Before you know it, those invisible $11 bonuses add up to a more meaningful amount of money, and more importantly, you started a good habit of saving money for your goals.