Build a Strong Financial Foundation
You don’t need to do everything at once. Small steps can make a difference over time, so start with these three basics:
Make a Budget
Build Emergency Savings
Understand Your Credit
Understand Family Tax Benefits
Some tax benefits can help families keep more of their money. The first step is knowing who may count as a dependent. In general, a dependent is a qualifying child or qualifying relative who relies on you for support and meets Internal Revenue Service (IRS) rules. A qualifying child usually must meet rules about relationship, age, where they live and how much support they provide for themselves. To learn more about who may qualify, visit the IRS dependents page.
Child Tax Credit
If you have a qualifying child, you may be able to claim the Child Tax Credit. This credit can lower the amount of taxes you owe, and some families may also qualify for a refundable part of the credit. You may be able to claim this credit even if you don’t normally file a tax return. There are rules for who qualifies based on the child’s age, relationship to you, living situation and more. To find out if you qualify, check the IRS Child Tax Credit guidelines.
Child and Dependent Care Credit
You may also qualify for the Child and Dependent Care Credit. This credit helps some working families who pay for care so they can work or look for work. It may apply if you pay for the care of a child under 13 years old or for a spouse or dependent who can’t care for themselves. The amount depends on your income and your work-related care expenses. To learn more, visit the IRS Child and Dependent Care Credit Information page. It may also be a good idea to get help from a trusted tax preparer.
Earned Income Tax Credit
Families with a qualifying dependent may be able to claim the Earned Income Tax Credit. This credit helps workers and families with low or moderate incomes reduce the amount of taxes they owe. Rules depend on your income, your child’s age and whether the child meets IRS requirements. To find out if you qualify, check the IRS Earned Income Tax Credit guidelines.
Learn About Trump Accounts
Trump Accounts are a federal savings program for children. They are designed to help children build long-term financial security through a tax-advantaged account. A U.S. child under age 18 with a valid Social Security number may have an account opened for them. A parent or guardian manages the account until the child turns 18.
A key part of the program is that eligible children born between Jan. 1, 2025, and Dec. 31, 2028, receive $1,000 from the federal government to start the account. Families and others can also contribute more money each year. After age 18, the money may be used for certain approved purposes, such as higher education, job training, a first home or starting a business. Families should be careful to use only official program information, which you can find at trumpaccounts.gov.
Save for Retirement
It’s not always easy to think about retirement when you’re raising a family but saving early can help. Even small amounts can grow over time. If your employer offers a match in a 401(k) or similar plan, try to learn how it works. That match can be a valuable benefit.
Here are some common retirement plans:
Save for College and Education
Saving for education can start small. A 529 plan is a special savings plan with tax benefits that can help families save for school costs. The money grows tax-free, and withdrawals are tax-free when used for qualified education expenses. There are two main types: prepaid tuition plans and education savings plans. To learn more about 529 plans and which education expenses 529 plans can be used for, visit investor.gov.
In addition to general 529 plans, Texas offers several education savings options:
- Texas Tuition Promise Fund is a prepaid tuition plan that lets families lock in current tuition rates and required fees at many Texas public colleges and universities. To learn more, visit the Texas Tuition Promise Fund website.
- Texas College Savings Plan is a direct-sold 529 plan that can be used for qualified higher education expenses like tuition, fees, books, and room and board. To learn more, visit the Texas College Savings Plan website.
- LoneStar 529 Plan is an advisor-sold 529 plan with different investment options for families who want help choosing a savings approach. To learn more, visit the LoneStar 529 Plan website.
- Texas ABLE is for eligible Texans with disabilities. It helps families save for disability-related expenses without automatically affecting certain public benefits. To learn more, visit the Texas ABLE website.