The short answer
- Write a one-page budget. List your take-home pay, then fixed bills, then everyday spending, then savings. Track one real month before you set targets.
- Keep your money in a federally insured account at a bank or credit union, and ask for the fee schedule before you open it. The FDIC answers questions about deposit insurance at banks; the NCUA insures savings at federal and most state-chartered credit unions.
- Turn on low-balance alerts and ask, in writing, how your bank handles a purchase that would overdraw the account.
- Start an emergency fund with any amount. You can have a federal tax refund deposited into up to three accounts, so part of it goes straight to savings.
- Check five tax credits for 2025: the federal Earned Income Tax Credit (up to $8,046), the federal Child Tax Credit (up to $2,200 a child), the California Earned Income Tax Credit (up to $3,756), the Young Child Tax Credit (up to $1,189) and the Foster Youth Tax Credit (up to $1,189). You only get them by filing a return.
- File for free. IRS-certified volunteers (VITA and TCE), IRS Free File and California's CalFile cost nothing. IRS Direct File was not offered in the 2026 filing season.
Step 1: Build a one-page budget
A budget is a plan for the money you expect this month. You do not need an app. Paper, a spreadsheet or a note on your phone works, as long as you look at it every week.
- Start with take-home pay, the amount that actually reaches your account after taxes and deductions. If your income changes from month to month, such as seasonal, gig or commission work, plan with your lowest recent month rather than your best one.
- List fixed bills by due date: rent or mortgage, utilities, phone and internet, car payment and insurance, child care, health insurance premiums and minimum debt payments.
- Track everything else for 30 days. Groceries, gas, school costs, eating out and small purchases add up. Your bank and card statements show most of it; add cash spending by hand.
- Turn yearly costs into monthly ones. Car registration, school clothes, holidays, yearly subscriptions and medical deductibles do not arrive every month. Divide each year's cost by 12 and set that amount aside monthly.
- Pay savings first. Pick a savings amount, even a small one, and move it on payday before you spend.
- Compare and adjust. If spending is larger than take-home pay, start with the biggest flexible items, not the smallest. Call a company before a bill is late to ask about a different due date or a payment plan.
| Line | What goes here | This month |
|---|---|---|
| 1. Take-home pay | Pay after taxes and deductions, plus child support or benefits you receive | |
| 2. Housing and utilities | Rent or mortgage, electricity, gas, water, trash, phone and internet | |
| 3. Food | Groceries and meals out | |
| 4. Getting around | Car payment, insurance, gas, repairs, transit passes | |
| 5. Children | Child care, school costs, activities | |
| 6. Health | Premiums, copays, prescriptions, dental and glasses | |
| 7. Debt payments | At least the minimum on each card or loan | |
| 8. Yearly costs ÷ 12 | Registration, holidays, subscriptions, deductible | |
| 9. Savings | Emergency fund first | |
| 10. Left over | Line 1 minus lines 2 to 9. If it is below zero, adjust lines 3, 4, 5 and 8 first |
Step 2: Choose an insured, low-fee account
An account lets your pay and tax refunds arrive by direct deposit instead of a paper check you have to cash. The government notes that a federal refund sent by direct deposit usually arrives in less than 21 days after you file (USAGov, January 2026).
First, check who insures the account.
- Banks: the Federal Deposit Insurance Corporation (FDIC) answers questions about federal deposit insurance coverage at 1-877-275-3342 (USAGov agency listing).
- Credit unions: the National Credit Union Administration (NCUA) insures savings in federal and most state-chartered credit unions. Because the word is "most," ask a state-chartered credit union directly whether it is federally insured. The NCUA lists a credit union locator and takes calls at 1-800-755-1030 (USAGov agency listing).
Ask the FDIC or NCUA, or check their websites, for the current coverage limit and how it applies to joint and other accounts before you keep a large balance in one place.
Then compare fees. Fees differ from one bank or credit union to the next, and the only reliable way to compare is to ask each one for its written fee schedule. Bring these questions:
| Ask | Why it matters |
|---|---|
| Is there a monthly fee, and how can I avoid it? | Ask exactly what waives it, such as direct deposit or a minimum balance, and get it in writing |
| What is the minimum to open the account and to keep it open? | A high minimum can trigger fees in a tight month |
| What happens if a purchase or bill would overdraw the account, and what does it cost? | A fee can be larger than the purchase that caused it; see Step 3 |
| Can I have debit-card purchases declined instead of paid with a fee? | A declined purchase is inconvenient but free |
| Which ATMs are free, and what do others cost? | Ask whether both your bank and the ATM owner can charge you |
| How fast are deposited checks available? | Matters if bills are due soon after payday |
| Are there fees for paper statements, replacement cards or closing the account? | Small fees add up over a year |
If something goes wrong, contact your bank first: the branch manager, the customer service line or the bank's website. Keep receipts and statements. If the bank does not fix it, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) through its complaint page (USAGov, September 2026).
Step 3: Stop overdraft fees before they start
An overdraft happens when a payment goes through even though your balance is too low. Fees, limits and choices vary from bank to bank, so get the answers for your own account.
- Turn on alerts in your bank's app or website for a low balance and for any large withdrawal.
- Ask for the overdraft policy in writing: the fee for each item, the most fees you can be charged in a day, whether there is a grace period to add money, and whether you can decline overdraft coverage for debit-card purchases and ATM withdrawals.
- Link a savings account as a backup if the bank transfers money from savings at no charge or for less than an overdraft fee.
- Keep a small cushion in checking that you treat as zero, and write down automatic payments that have not cleared yet.
- Line up due dates with payday. Ask billers to move a due date if it falls just before you are paid.
- If you are charged, call the bank and ask whether it will reverse the fee. If you think a charge breaks the account terms, use the complaint steps above.
Step 4: Start an emergency fund
An emergency fund is money set aside for a surprise: a car repair, a reduced paycheck, a medical bill. It keeps one bad week from turning into overdraft fees, late fees or high-interest debt.
- Set a first goal you can reach in a few months, such as the cost of one car repair or one month of utilities. Then build toward one month of essential expenses, and keep going from there.
- Keep it in a separate, insured savings account so it is easy to reach in an emergency but not mixed with spending money.
- Make it automatic. Schedule a transfer on payday, even if it is small.
- Use your tax refund. When you file, you can choose direct deposit and have the IRS split your refund into up to three accounts (USAGov). Sending part to savings before it reaches checking makes it easier not to spend.
Tax credits California families miss
Several of the largest payments for working families come through a tax return. Many are refundable: you can receive the money even if you owe no income tax. You only get them by filing. The Franchise Tax Board (FTB), California's income tax agency, puts it plainly: "You must file your state tax return to claim CalEITC" (FTB).
The figures below are for tax year 2025, the returns filed in 2026. They change every year.
| Credit | Who it is for | Most you can get | Where you claim it |
|---|---|---|---|
| Federal Earned Income Tax Credit (EITC) | People with income from work under the limits below | $649 with no qualifying children; $8,046 with three or more | Federal return |
| Federal Child Tax Credit | Children under 17 at the end of 2025 with a Social Security number valid for work; the filer, or a spouse on a joint return, also needs a valid Social Security number | $2,200 a child; up to $1,700 of it refundable | Federal return |
| California Earned Income Tax Credit (CalEITC) | Californians with earned income of $1 to $32,900; a Social Security number or ITIN works | $302 with no qualifying children; $3,756 with three or more | California return, with Form FTB 3514 |
| Young Child Tax Credit (YCTC) | CalEITC-eligible families with a child under 6 at the end of 2025 | $1,189 for filers with one or more qualifying children | Form FTB 3514 |
| Foster Youth Tax Credit (FYTC) | Ages 18 to 25 who were in California foster care at age 13 or older and qualify for CalEITC | $1,189 a person; $2,378 if both spouses qualify | Form FTB 3514 |
Federal Earned Income Tax Credit
The EITC depends on your income, filing status and the number of qualifying children. For 2025, your adjusted gross income (AGI) must be under these limits, and your investment income must be $11,950 or less (IRS):
| Qualifying children | Maximum AGI: single, head of household, married filing separately, surviving spouse | Maximum AGI: married filing jointly | Most you can get |
|---|---|---|---|
| None | $19,104 | $26,214 | $649 |
| One | $50,434 | $57,554 | $4,328 |
| Two | $57,310 | $64,430 | $7,152 |
| Three or more | $61,555 | $68,675 | $8,046 |
What counts as earned income: wages from working for someone else, gig work and self-employment. Interest and dividends, pensions, Social Security, unemployment benefits, alimony and child support do not count. The IRS offers an online EITC Assistant to check whether you qualify, and its page also lists the limits for 2022, 2023 and 2024 if you are filing for an earlier year.
Federal Child Tax Credit
- Amount: up to $2,200 for each qualifying child for 2025. Up to $1,700 a child is refundable as the Additional Child Tax Credit, and you need at least $2,500 of earned income to get that refundable part (IRS).
- The child must be under 17 at the end of the year, be your son, daughter, stepchild, eligible foster child, sibling or a descendant of one of them, have lived with you more than half the year, be claimed as your dependent and be a U.S. citizen, national or resident alien.
- Social Security numbers: the child needs a Social Security number valid for employment, issued before the return's due date. You, or your spouse if you file jointly, must also have a valid Social Security number issued before the due date.
- Income: the full credit applies up to $200,000 of income, or $400,000 on a joint return; above that, it shrinks.
- Other dependents: a dependent who does not qualify, such as an older child or a child with an ITIN, may qualify for the Credit for Other Dependents, up to $500. That dependent needs a Social Security number, ITIN or ATIN.
The IRS reminded families of these 2025 amounts in Tax Tip 2026-17 on March 3, 2026.
California Earned Income Tax Credit (CalEITC)
California's rules differ from the federal rules in ways that matter to many families. For 2025 (FTB; FTB 3514 instructions):
- Income: earned income of at least $1 and no more than $32,900. Your federal AGI must also be below $32,901.
- Most you can get: $302 with no qualifying children, $2,016 with one, $3,339 with two and $3,756 with three or more.
- ID numbers: you, your spouse or registered domestic partner, and each qualifying child need a valid Social Security number or an Individual Taxpayer Identification Number (ITIN). The FTB says filers using an ITIN may be asked for identity documents acceptable for a California ID card.
- Other rules: be at least 18, or have a qualifying child; live in California more than half the year; and have investment income of $4,814 or less.
- How to claim: file a California return with Form FTB 3514.
Young Child Tax Credit
If you qualify for CalEITC and at least one qualifying child was younger than 6 on December 31, 2025, you may also get up to $1,189. The credit starts to shrink once earned income passes $27,425 and ends at $32,901. Families with no earned income, or with a business loss, can sometimes still qualify; the FTB 3514 instructions set out the limits (FTB).
Foster Youth Tax Credit
If you were 18 to 25 at the end of 2025, were in foster care at age 13 or older and were placed through California's foster care system, and you qualify for CalEITC, you may get up to $1,189, or up to $2,378 if you and your spouse both qualify. Claim it on Form FTB 3514 (FTB).
Example (fictional): A single mother in Fresno earned $24,000 in wages in 2025 and has one son, age 3. Both have Social Security numbers. Her income is under the $50,434 federal EITC limit for one child and under the $32,900 CalEITC limit. Her son is under 17, so she can check the Child Tax Credit, and under 6, so she can check the Young Child Tax Credit. Her earnings are below the $27,425 point where that credit starts to shrink. A VITA volunteer can work out the exact amounts on both returns at no cost.
Missed a year? You can still file
- Federal: if you did not file and were owed a refund, "you can still file a return within three years of the filing deadline to get your refund" (USAGov). The IRS publishes EITC limits for earlier years on the same page as the 2025 limits.
- California: CalFile accepts 2023, 2024 and 2025 returns (FTB). The final deadline for 2025 California returns filed under the automatic extension was October 15, 2026 (FTB, October 9, 2026).
- If you owe and cannot pay, the FTB says to file on time anyway to reduce penalties and interest. It offers payment plans for balances of $25,000 or less, repaid within five years, and a one-time cancellation of a late-filing or late-payment penalty if you are current on all returns, owe nothing but the penalty and have never used this relief before (penalty line: 800-689-4776) (FTB, April 3, 2026).
File for free
You do not have to pay to claim these credits. These are the free options for 2025 returns, with the limits the IRS and FTB list now:
| Option | Who can use it | Good to know |
|---|---|---|
| Volunteer Income Tax Assistance (VITA) | People who generally make about $70,244 or less, people with disabilities and people who speak limited English | IRS-certified volunteers prepare your return. Individual sites may set their own limits. Find one with the IRS locator or at 800-906-9887; the locator is updated regularly from February through April |
| Tax Counseling for the Elderly (TCE) and AARP Tax-Aide | Especially people 60 and older | AARP Tax-Aide sites can be found at 888-227-7669 between January and April |
| IRS Free File guided software | Adjusted gross income of $89,000 or less for 2025 returns | Each software partner may set its own rules; some also prepare a state return free |
| IRS Free File Fillable Forms | Any income | Electronic versions of IRS paper forms, for people comfortable doing their own return |
| CalFile (California returns only) | Californians who meet the qualifications listed on the FTB's CalFile pages | Free, filed directly with the FTB. You need a MyFTB account, and to register you must have filed a California return in one of the last five years |
| IRS Direct File | Not available | Not offered in the 2026 filing season; see below |
Sources: IRS, free tax return preparation (updated October 19, 2026); IRS news release IR-2026-05 (January 9, 2026); FTB, CalFile.
About IRS Direct File. In 2025, IRS Direct File let eligible taxpayers in 25 states, including California, file federal returns directly with the IRS. In November 2025 the IRS told those states by email that "IRS Direct File will not be available in Filing Season 2026" and that no future launch date had been set, as reported by Nextgov/FCW and Route Fifty. Before the 2027 filing season, check IRS.gov for the current list of free options.
If you pay someone, choose carefully. The California Attorney General's office says that in California only an attorney, a certified public accountant, an IRS enrolled agent or a registered tax preparer may prepare returns for a fee (California Attorney General, March 2025). Never sign a blank return, and make sure the refund goes to your own account.
Protect yourself from tax and banking scams
The warning signs
Government agencies usually start contact by letter. An unexpected call, text, email or visit demanding money, a gift card or personal information may be a scam, even if the caller ID looks official (USAGov, October 2026). Hang up, and call the agency or your bank yourself at a number you find on its official website, your statement or the back of your card.
- Tax imposters claim you owe taxes and may threaten legal action. The FTB warns that scammers pose as IRS or FTB employees through texts, emails, calls, fake websites and fraudulent mail. Do not reply to or click links in suspicious messages. If you are unsure, contact the FTB directly; call 800-852-5711 about a suspicious letter (FTB).
- Bank imposters claim there is a problem with your account or that you owe money (USAGov). Your bank already has your account details; do not read codes, passwords or card numbers to someone who called you.
- Report imposter scams to the Federal Trade Commission at ReportFraud.ftc.gov, and tax-related fake messages to the IRS through its report fake IRS, Treasury or tax-related emails and messages page. In California, you can also report tax-related scams or preparer misconduct to the Attorney General at oag.ca.gov/report.
- If your identity was stolen, report it to the FTC at IdentityTheft.gov or 1-877-438-4338, and ask the three major credit reporting agencies for a fraud alert and a credit freeze. If someone filed a tax return using your information and the IRS has not contacted you, file IRS Form 14039, the Identity Theft Affidavit (USAGov).
For a quick check before you send money anywhere, see verify before you pay: five scam shapes.
Put medical costs in the budget
Health costs are easy to leave out because they are irregular. Give them their own line (line 6 in the budget sheet above) and include premiums, regular prescriptions, and a monthly amount toward your deductible, dental work and glasses. For how health savings and flexible spending accounts work, and a worksheet for setting aside money for irregular medical bills, see HSA or FSA? How each works, and how to budget for irregular medical costs.
When a bill is more than you can handle:
- Ask about charity care. In most cases you apply through the doctor or hospital where you are treated, and it may cover what remains after insurance or Medicaid pays (USAGov, September 2026).
- Check the bill itself before you pay. How to read an itemized hospital bill before you dispute it explains each step.
- On Medicare? Four Medicare Savings Programs may help pay Part A and Part B premiums, deductibles, coinsurance and copayments, and Extra Help lowers Part D prescription costs.
- For medicines, ask the drug or device maker about low-cost programs, and ask your clinician or pharmacist whether a lower-cost option would work for you. See generic versus brand-name medicines.
- For medical debt, a credit counselor's debt management plan sets a payment schedule and may get you lower interest rates and some fees waived.
A health note: cutting a prescribed medicine, skipping a follow-up visit or stretching doses to save money can cost more later. If cost is the problem, tell your clinician and ask what options exist. To see which checkups and screenings your plan may cover, read free preventive care under your insurance.
Where to get free help
- Free tax preparation (VITA and TCE): 800-906-9887, or the IRS VITA Locator Tool. AARP Tax-Aide: 888-227-7669, January to April.
- In California, Franchise Tax Board: 800-852-5711 for questions and suspicious letters; 800-689-4776 for penalty relief. CalFile and the CalEITC pages are at ftb.ca.gov.
- Deposit insurance: FDIC, 1-877-275-3342, for banks; NCUA, 1-800-755-1030, for credit unions (NCUA fraud hotline: 1-800-827-9650).
- Bank and credit complaints: the Consumer Financial Protection Bureau, after you have tried the bank first.
- Scams and identity theft: the Federal Trade Commission at ReportFraud.ftc.gov; identity theft at IdentityTheft.gov or 1-877-438-4338.
- In California, the Attorney General: oag.ca.gov/report for tax-related scams and misconduct.
- Not sure where to start: USAGov answers questions about government services at 1-844-872-4681 (1-844-USAGOV1), by phone or chat.
Sources
- Earned income and Earned Income Tax Credit (EITC) tables — Internal Revenue Service, last reviewed May 8, 2026.
- Child Tax Credit — Internal Revenue Service, last reviewed October 29, 2026.
- Tax benefits for parents and families (IRS Tax Tip 2026-17) — Internal Revenue Service, March 3, 2026.
- Eligibility and credit information: CalEITC — California Franchise Tax Board, updated April 16, 2026.
- 2025 Instructions for Form FTB 3514, California Earned Income Tax Credit — California Franchise Tax Board, accessed October 29, 2026.
- Foster Youth Tax Credit (FYTC) — California Franchise Tax Board, updated April 16, 2026.
- What Californians need to know before the April 15 tax deadline (news release) — California Franchise Tax Board, April 3, 2026.
- October 15 tax filing deadline is almost here (news release) — California Franchise Tax Board, October 9, 2026.
- CalFile — California Franchise Tax Board, updated December 1, 2025.
- Free tax return preparation for qualifying taxpayers — Internal Revenue Service, last reviewed October 19, 2026.
- Use IRS Free File to conveniently file your return at no cost (IR-2026-05) — Internal Revenue Service, January 9, 2026.
- Direct File won't happen in 2026, IRS tells states — Route Fifty (Nextgov/FCW), November 5, 2025.
- Attorney General Bonta: Eligible Californians May Submit Taxes for Free — California Department of Justice, Office of the Attorney General, March 19, 2025.
- Undelivered and unclaimed tax refund checks — USAGov, last updated December 22, 2025.
- Set up direct deposit to receive your tax refund — USAGov, last updated January 5, 2026.
- Imposter scams — USAGov, last updated October 7, 2026.
- Identity theft — USAGov, last updated July 22, 2025.
- Bank, credit, and securities complaints — USAGov, last updated September 1, 2026.
- How to get help with medical bills — USAGov, last updated September 9, 2026.
- Federal Deposit Insurance Corporation and National Credit Union Administration (agency listings) — USAGov, accessed October 29, 2026.
Information notice: this page provides general educational information. It is not medical, legal, financial, tax or insurance advice, and it cannot account for your individual circumstances. Sources checked through October 29, 2026.