5 Steps for Military Families
By: Katie Gushen
Creating New Year’s resolutions can feel empowering, but certain resolution areas – such as money – can bring feelings of anxiousness or dread. For many military families, reassessing finances is often on the list. From budgeting and retirement to paying for large expenses in the future, spending time planning in the beginning of the year can offer you financial peace of mind as the year passes.
1. Commit to creating a budget – One of the top financial resolutions for military families in the New Year is establishing a budget. Creating a budget is always a time-consuming task in the beginning, but after the initial work is complete, you’ll be glad you put in the effort. By tracking the amount of money you are earning versus the amount you are spending, you’ll have a better understanding of your spending habits and in which areas there is potential to save money.
Most people who do not have a budget are often unaware of how much they spend, especially on frivolous or impulse purchases. You can create a budget using an Excel spreadsheet, old-fashioned pen and paper, or by using the AWM&T Financial Dashboard. The Personal Financial Dashboard makes it easier to monitor your financial accounts online and create a customized budget to help you control spending with one login at aafmaa.com/wealth. Once you get the hang of creating a budget, you will look at the task as less of a chore and more of a roadmap to achieving financial success for your family.
2. Create specific financial goals – According to a recent Forbes article, when people write down their financial goals for the New Year, they are more likely to accomplish them. This goal-setting study found that people who write down their goals, and vividly describe the goal or use pictures, are 1.2 to 1.4 times more likely to succeed in reaching the goal.
When you begin writing down your ambitions, be sure to create objectives that are measurable, well-defined and time-sensitive. This will help you stay on track time-wise and be able to identify if you are progressing through the year as well as you planned.
3. Make a commitment to paying off debts – Debt continues to increase for American families across the board, according to a recent Federal Reserve survey. In 2018, the average debt per U.S. household was almost $7,000 in revolving balances. And, according to Military.com, military families typically carry more debt than civilian families. Debt – in addition to causing an enormous amount of stress – can specifically affect military members, as too much debt can revoke security clearances.
If paying off debt in full is out of the question, plan to pay off debts with the highest interest rates first, and a commitment to paying a little extra towards your debts in general. If you feel overwhelmed when it comes to tackling your debt, speaking to a Relationship Manager at AAFMAA Wealth Management & Trust and creating a plan together may give you the encouragement and insight you need.
4. Analyze your retirement options – You may feel like retirement is far off, or that you have waited too long to begin planning, but it is never too early or late to research your retirement options. According to a recent article from The Motley Fool, in the U.S. the average person’s retirement in the U.S. lasts 18 years and costs around $828,000.
You may think you have no extra money to put towards a retirement savings fund, but this is another reason why creating a budget is so important. By analyzing expenses, you can free up some extra cash to steer into a retirement savings or investment account. Also, you can speak to one of our Relationship Managers about The Thrift Savings Plan, which is similar to a civilian 401(k) but only accessible to military members, allowing you to make tax-deferred investments that can be withdrawn during retirement or rolled into an IRA if you leave the military.
5. Protecting your family – Other 2019 financial goals for military families include analyzing your family’s financial health. If you have a spouse or dependents, have you considered buying a life insurance policy, disability insurance, and long-term care policies? Speak to a financial representative about SGLI – Servicemembers’ Group Life Insurance – a life insurance plan available specifically for military members, and about other policies that can protect you and your family long-term. Also, make sure you read our recent article on the topic, Is SGLI Insurance Enough for My Family?
While many New Year’s resolutions don’t last, putting in some time and effort now – and reassessing your financial objectives throughout the year – can help you achieve your monetary goals all year long.
Not sure how to get started with your military financial goals for 2019? We can help!
Whether you’re active duty, transitioning, or veteran status, we stress test your financial plans against any and all bumps you might encounter along the way.