Let’s face it – military life is hard and involves a series of relocations, and deployments. In addition, most families live off on one income which might make it difficult to save and plan their future. However, everyone needs to save and invest for financial security whether you are in the military or not. Best-selling author and radio host Dave Ramsey says, “Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” From simple lifestyle changes to sensible spending, saving and investing for a secure financial future is completely doable.
Financial Security in Military Families: Saving and Investing Tips
Saving Money Is Not That Difficult
It is. But with careful planning, you should be able to stash some money aside no matter how small it is. To start off, you will need a budget and spending plan that gives you control to track expenditures. Get a handle on both daily and monthly expenses so you know where you are headed and what’s causing those holes in your budget. This will enable you to adjust spending accordingly. There are several positions as to how much you should save as a percentage of income such as the 50/20/30 rule (50 for necessities, 20 for savings and 30 for lifestyles) popularized by Senator Elizabeth Warren. Others say that it is a function of your personal circumstances such as age and the time you envisage to reach financial freedom. Whatever approach you believe in, saving a portion of household income every month is a step towards financial security.
Take Advantage of Military Perks
From shopping at commissaries to buying gas inside the base, the military offers many perks that you should take advantage of. Avail of the free tax help for military families. Should you receive a tax refund, you can already put this money aside in savings or your kitty funds. A tax break is also available for the military serving in combat zones. It gives an automatic 180-day extension for tax returns, claims, and payments. Use the GI Bill to do training, college credit or certification and enhance skills/qualifications. Savings in education could easily reach as much as $69,000 under the Montgomery GI Bill.
Pay Off Debts and Start an Emergency Fund
Talking about money with your spouse is always helpful. Knowing that you are on the same plane and want to reach the same goals, make it easier to achieve them. For instance, prioritize paying off high-interest bearing debts on outstanding loans and credit card balances. Start an emergency fund that you can depend on in case of unplanned and urgent situations. This money should be ideally placed in a savings account that you can withdraw easily for emergencies.
Investing Requires Good Financial Education
Think about how your savings could work for your future. But before you dabble in investments, you need a bit of financial education to avoid losing money. Whether you plan to invest in cryptocurrencies or US bonds, you should consult an accredited financial specialist before parting with your hard-earned savings. Consider investment fees that can affect earnings in the long run. Your financial advisor might recommend the Thrift Savings Plan (TSP) as an option for retirement savings. You might also be tempted by the Blended Retirement System (BRS) that took effect January 2018, a retirement plan that draws on 2 sources of income – the existing annuity for those leaving the service after 20 or more years plus the TSP.
Long-term financial security is a major goal for everyone especially military families that are constantly relocating. Having a healthy bank balance ensures that there is money to help pay for your kids’ college education, a kitty fund for emergencies or a good retirement stash. Maybe, there’s even enough to pay for that fabulous vacation you have been dreaming of for years.