The IRS has additional guidance on retirement savings and tax rules:
Understand Your Finances
How you manage your money affects many parts of your life, like where you live and when you can retire. Understanding your finances helps you make good choices. It can improve your financial health, protect your money, and build long-term stability.
Important finance terms to know:
Income: Money you earn from all sources.
Expenses: What you spend money on.
Budget: A plan for how you spend your money, helping you live within your means and save for emergencies.
Debt Management: How you handle loans and credit to avoid too much debt and how to pay off debt.
Saving and Investing: Putting money aside to reach financial goals, like buying a car or home, having emergency savings, or saving for retirement.
Creditor and Debtor: A creditor is a person or business that lends money or credit to another person, usually with an agreement or contract for how the money will be paid back. The person who owes money to the creditor is called the debtor.
Budget: create a financial roadmap
Your budget is the foundation of your personal finances. It helps you track your income and expenses. A budget ensures you do not spend too much and helps you save for future goals.
The Consumer Financial Protection Bureau (CFPB) offers many tools and resources including budgeting worksheets and guides to help you take control of your finances. The National Foundation for Credit Counseling (NFCC) offers financial education articles, tools for budgeting, and free and low-cost online courses.
Credit scores and debt management
To have good financial health, you need to manage your debt. Sometimes you might need to borrow money to buy a house or pay for school. But having too much debt can cause financial problems.
Your credit score is a number that shows banks, businesses, and stores how risky it is to lend you money.
Your credit score affects whether you can get loans and the interest rates you pay. A good credit score can help you get lower-interest loans. A low score can make borrowing money expensive or hard.
To improve your credit score:
- Pay your bills on time.
- Keep your credit use low (don't get too close to your credit limit).
- Avoid opening too many accounts.
- Check your credit reports for errors and fix them quickly.
Federal laws such as the Fair Credit Reporting Act (FCRA) protect you.
The FCRA lets you see your credit reports and fix any mistakes. You can get a free credit report once a year from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. You can request your free credit report every year at www.annualcreditreport.com.
Arizona laws have additional protections.
For example, Arizona limits how much creditors can garnish from your wages if you owe money.
The National Consumer Law Center (NCLC) offers a free e-book called “Surviving Debt”. It has advice on managing debt, dealing with debt collectors, and improving your credit score.
How and why to save
For most long-term financial goals, you need to plan and stick to your plan.
Save for emergencies
Financial emergencies – whether it is a medical bill, car repair, or unexpected job loss – can cause problems for you if you have not saved money.
Try to save enough to cover three to six months of living expenses. This safety net gives you financial security in case of unexpected events. Having an emergency savings account can help you avoid using credit cards or taking on high-interest debt. Many banks offer savings accounts with higher interest rates which may help you to grow your emergency savings over time.
Save for educational goals
For educational goals, like attending college, you can save for tuition and expenses using an Educational Savings Account (ESA).
The beneficiary (usually your child or a related child if they are the student) can withdraw funds without being taxed to pay for qualified education expenses. The Internal Revenue Service (IRS) has detailed information on how Educational Savings Accounts work. Arizona residents can use the Arizona 529 College Savings Plan to save for education and get state tax deductions.
Save for retirement
Many people save for retirement through employer-sponsored plans like 401(k) or 403(b), or through individual retirement accounts (IRAs).
These accounts let you save and invest your income before it is taxed, lowering your taxable income and increasing your retirement savings. “Tax-advantaged” or “tax-deferred” means you put money into a plan (up to a limit each year), and the plan invests your money. You don’t pay taxes on the earnings until you take money out after age 59½. If you take money out before then, you usually pay a 10% penalty, but there are exceptions.
Improve your financial knowledge
Financial literacy means understanding money. Many people don’t know how to handle complicated financial systems. Government agencies provide education and resources to help you understand your personal finances.
The Federal Deposit Insurance Corporation (FDIC) offers a free program called Money Smart. It covers topics like managing credit, saving for retirement, and building a budget.
In Arizona, the Arizona State Treasurer provides financial literacy materials through its Financial Education Portal. It has guidance on saving money, budgeting, managing debt, and planning for retirement.
Avoid scams and protecting your identity
Fraud and identity theft are complicated criminal matters that may have a long-term impact on your finances.
Scammers target people through phishing emails, fake investment schemes, and fake debt relief offers. To avoid scams, protect your financial information.
Federal agencies like the Federal Trade Commission (FTC) provide guidance on avoiding fraud. The FTC also has a website where you can report identity theft and get help recovering from it.
The Arizona Consumer Fraud Act (A.R.S. § 44-1521-1534) makes it illegal for businesses to use deceptive practices in advertising or selling merchandise. The Arizona Attorney General’s Office is a valuable resource for reporting fraud and getting consumer protection help.
This topic can be complicated. You may want to talk to a legal professional for help.
This website shares general legal information. Some content may be simplified or may not reflect recent changes in law. If you need advice for your specific situation, you should talk to a legal professional.
This content was last updated on Oct 1, 2025.