If you had a spare/surprise £500...

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I've had a text to say I'm eligible for the £500 tax credit bonus this month.

We live reasonably frugally (I do get some of the working tax credit element and have worked throughout covid) but not as strugglesome as we were 5 years ago due to job changes etc. I'm a single parent, kids see dad incredibly rarely. We have a monthly budget that I always stick to which includes putting money away for things like Xmas, birthdays, car expenses, even holiday/emergency fund. We don't aspire to fancy gadgets, I drive a sensible & reliable car, albeit a bit old and battered, kids recognise that we can't stretch to fancy trainers/brand clothing. I have a mortgage that doesn't scare me any more, and is comfortable in our budget. We do occasionally have treats - takeaways, meals out, cheapo weekends away just the 3 of us, budget self-catering holidays when we're able.

So this £500 is a real bonus. I've got nothing that needs replacing, I'm very OK with getting clothing bargains online and I hate physical shopping for the sake of it. Do I stick it in the holiday piggy bank? Make a payment on my mortgage? Treat for me or the kids? Blow it all on sex, drugs and rock and roll?

If you had an unexpected £500 (that was surplus to your monthly budget), what would you spend it on?

Put it towards a handbag.

I'd save it personally. Having your own mortgage means its inevitable that some big costly thing will arise at some point.

Half towards savings investment of some sort. Then I'd use rest as fun money when things reopen. Days out, hair coloured

£50 on a treat (nice takeaway, new family game or something) and the other £450 overpaying the mortgage. I am frugal and boring haha.

I would add it to my holiday fund, whose coffers are currently overflowing with dosh seeing as I haven’t had a bloody holiday since bloody February last bloody year.

I fully intend to make up for this ASAP.

I'd put it aside and book a nice family break away or if you're outdoorsy, invest in a good tent for camping holidays

Holiday. Upgrade from your normal

HMRC: One-off £500 payment by 23 April for working households receiving tax credits - it's automatic so no action needed. Search 'one-off payment' on Gov UK

Is that the text you had? Does that mean you get the £500?, if not how do you know you are getting it as the rules are so unclear!

Isn't it given to you because they're reducing tax credits soon? I thought that's what was happening.

I would spend it on a bit of a treat, a painting or a meal out or a piece of jewellery. But I have a high income and lots of savings. In your position I'd add it to my savings, maybe spend 10% on a small treat.

I would keep it in savings. There's no point in you spending it on something you don't need.

I would keep hold of it just in case there was a reduction in tax credits coming, but assuming not I would spend it on a break/experiences for the kids - there’s been so little of that this last year.

I don’t think tax credits are reducing, the payment is because people on universal credit have had an extra £20 a week throughout the pandemic, whereas they didn’t apply it to tax credits- probably hoping it would incentivise some to migrate over to UC.

Wording is very unclear though, we get TC, but not WTC but we both work, 1 full time, one part time so no idea if well get it or not.

Would your DCs really enjoy an unexpected treat, once life can be more normal? It's been such a hard year, I think I'd talk to them about it and explore options. How lovely to have a windfall, I hope it gives you great pleasure.

Have you got an emergency fund? If not I'd use that to start one. Do you have savings for the future/retirement? Honestly I would chuck it in the house renovation pot/ISA in our case, especially as like you we already put some aside for things like holidays and Christmas.

On your position I’d probably treat the kids to a take away and put the rest away in savings for a rainy day.

It’s easy to say piss it up the wall and treat yourself but personally having some savings to fall back on gives me piece of mind that’s a lot more long lasting than a day trip or a handbag!

In your current situation, I'd put most/all of it in premium bonds. Theres a Chance you'd get a prize (£25 is the minimum I think) which is better than lots of interest rates currently available, and you can get it all back if you need the funds.

There's a current thread on premium bonds on MN if you want to take a look at that. 🌹

Save it OP. Unless you have 3-6 months of household expenses saved already that is. It's Sod's law that if you spend it on shite...the car will break down next week!

We have six months money behind us and still scoop all spare cash into premium bonds.

We don't have a working oven so I'm replacing that. I'd keep it for emergencies.

When I say spare I mean a spare £10 here, five there from our weekly treat take away being cheaper than we thought.

Tesco not delivering everything on the list, if we can live without it,until the next shop, the money saves goes into the PB pot.

In your case I'd save most of it, but use maybe £50-100 to do something 'extra' with the DC.

Maybe something you know they'd like but wouldn't normally do due to the expense like Alton Towers, or a wildlife park visit. Or a NT membership might be a good investment if that's your sort of thing.

Spending it for the sake of it on things like handbags and paintings would be a bit daft in your situation, unless it's something your desperate for and never normally spend money on yourself because you're too busy doing sensible budgeting.

Another supporter for premium bonds. Put it away there, and then perhaps draw down some of it to take the pressure off at Xmas.

Yes, premium bonds are a good idea.

People will tell you they are pointless, but seeing as you'd get a couple of quid interest a year tops in a savings account, you might as well gamble it on a chance of doing better than that.

I'd probably go with the 10% on a treat of some sort, 90% savings/overpaying mortgage.