The thought of finances can make even the most savvy spouse shudder, but making an effort now can pay off big time in the long run.
Lauren Silbert, vice president and general manager of The Balance, sat down with Military Spouse to share the best tips for financial success for military families.
1: Invest early.
The earlier you can start investing, the better.
“Even if it’s just in a retirement account like a ROTH IRA or 401k,” Silbert said. “Use the power of compound interest to generate even more income you can use in retirement. Investing wisely can mean your money makes money through interest. Every day, month, and year you let your money grow, the better off you’ll be down the line.”
2: Utilize a budget.
Knowing how much money you spend versus save may seem like a pretty obvious concept, but less than a third of American households keep a budget.
“Having this information at your fingertips can give you the confidence to make decisions for yourself and family without the fear of the unknown,” Silbert shared.
3: Pay off credit card debt.
Credit card debt is some of the most costly debt you can have.
“The interest rates on credit cards are extremely high, and many people don’t realize that the problem compounds itself, growing larger the longer you leave it unpaid,” Silbert explained. “Depending on what other kind of debt you carry, paying off credit card debt first, and if you can, paying total balances each month, will give you much more freedom to do things that will actually improve your situation like investing or even taking on better debt like a mortgage.”
4: Plan for retirement as soon as you start making money.
People should think about retirement as soon as they start generating an income.
“Parents can help set up retirement plans for their children as soon as they start making money, even from chores,” Silbert shared. “This does double duty as a way to take advantage of compound interest and teaches your kids about financial planning at an early age. The more you save in your twenties and onward, the more time your money has to grow.”
5: Saving money first allows for future investing.
Silbert suggests starting with an emergency fund and building income from there.
“The first thing you should do is save an emergency fund,” she shared. “This will help you stay afloat if you’re ever in a situation where your income changes or unexpected expenses pop up, and we know after 2020 that this is not a hypothetical situation.”
Goal: Try to save at least three months’ expenses, but six months or more is recommended.
“Once you have an emergency fund set aside, then think about investing,” Silbert explained. “Set specific goals you want to achieve, like buying a house or hitting a certain dollar amount, so you have something to work toward and motivate you to save strategically. Breaking down your savings goals to weekly or even daily amounts can be a huge motivator. Small and steady steps are achievable and add up majorly over time. Don’t beat yourself if you can’t save thousands right off the bat – starting small is still a start.”
6: A financial advisor can be a savvy asset.
Financial professionals can spot opportunities and strategies you may not know about, and help design a financial saving and investing plan tailored to your income and goals.
“While a family member may be deployed and their spouse is busy taking care of the family, you can trust a financial advisor to keep you on track for goals, take advantage of market moves, and ensure you’re preparing for retirement,” Silbert said. “They’re available to educate you, connect you with other financial professionals, like mortgage lenders and accountants, and course correct when things change in your financial picture.”
Quick financial tips for military families
1. Depending on the service member’s status, your finances and spending patterns can fluctuate greatly. You’ll want to set up budgets that take into account a baseline. This might mean you save more at times, which will give your family a little bit of a cushion when service ends or retirement approaches.
2. Take advantage of special lending and programs that provide advantageous rates for service members, and make sure you stay in close contact with your lenders about your family’s status.
3. If you’re not sure whether a business or service offers a military discount or perk, always ask!
