Running a family is challenging for any parent. Aside from simply covering expenses, parents are also responsible for protecting and providing for their loved ones. Over time, the cost of paying for utilities, food, unexpected medical bills, and education significantly adds up, and families that don’t budget are left scrambling to keep up. It can be more challenging for military families. The nature of military service requires active personnel to travel and relocate frequently. It creates financial uncertainty because the lifestyle becomes unpredictable.
[bctt tweet="Military life creates financial uncertainty because the lifestyle becomes unpredictable"]
It’s sad to say, but some of our nation’s bravest men and women are living paycheck to paycheck. It becomes vital to take control of finances to build a sustainable future. With that said, it’s important that military families establish healthy financial habits that will help them in the long run. Before we get into our tips, it’s also worth mentioning that military spouse unemployment is a real issue. Spouses of active military personnel either go without seeing their husbands for months or constantly relocate with them. Unless their employer allows them to work from home, keeping a job can be a real challenge, increasing the need for a strong financial backup for the rainy days. If you’re working through maintaining your expenses, here are a few tips to consider.
- Know Where Your Money Is Going. It is the first step you should take before working on controlling your expenses. Many people take a casual, hands-off approach to spending their money, which typically includes discarding receipts, making spontaneous purchases, and not thinking ahead. The result is that they are not sure where the money went. It is in your best interest to develop a habit of tracking every penny you spend. You can write it down or maintain a digital spreadsheet. This way you won’t be in the dark about where your hard-earned money went. From here, you can better understand your expenses and begin to plan for your future.
- Rethink Your Savings Account. Most people put their savings account on the bottom of their finances, only contributing money when they remember. What if you were to change your habit? Consider treating your savings account as an entity whom you owe money. Every month after you’re done paying all the bills, pay your savings next. This mentality will force you to contribute a fair amount in the account on a consistent basis, instead of the metaphorical loose change you forget in clothes.
- Develop an Emergency Deposit. Building your savings account is a must, but it shouldn’t be your first stop for cash when life gets rocky. This is where an emergency fund, or rainy-day fund, comes in. It’s essential to understand that there is a difference between a savings account and an emergency fund. A savings account is maintained for specific things we want, things we can foresee happening. It can be for a car you want to buy, upcoming down payment, educational expenses, childcare expenses. A savings account typically allows a limited number of withdrawals to help you preserve cash. However, an emergency fund is a reservoir of cash that is meant to serve as a backup in case of emergency. Like the loss of job, illness, unexpected death, medical bills. It is recommended that people have 3-6 months set aside in the emergency backup. This cash on hand is easily accessible and doesn’t require getting a bank involved.
- Contribute to Thrift Savings Plan. The Thrift Savings Plan (TSP) is a retirement savings plan for Federal employees and members of the military. It serves as an investment opportunity in the same way that private organizations offer their employees under 401(k) plans. It is tax-deferred, meaning the government doesn’t deduct anything from your account before retirement.
- Begin to Pay Off Your Debt. Credit card debt impacts hundreds of thousands of Americans across the country. According to a recent report by CNBC, the average American credit card balance is $6,375. Military families are also subject to credit card debt, which can be hard to pay when constantly trying to stay afloat with current expenses. However, with proper budgeting techniques and a better understanding of the flow of money within the family, today could be the day to tackle this debt. For starters. make a habit of paying more than the set minimum payment, if you can, even if it’s a meager amount. It will benefit your credit score, and your financial worries. It is also wise to develop a habit of using the credit card responsibly. Avoid carrying balances over to the next month, always paying in full at the end of the month. Using cash instead of a card to pay for everyday purchases will set you on the right path.
- Take Advantage of Military Discounts. Being in the military has its perks. While the Government has programs set up to help service members and their families, many companies, from local small businesses to globally recognized brands, make their appreciation known for our armed forces through military discounts and special offers. Don’t be shy to avail these opportunities. It is the people’s way of showing gratitude.
Controlling finances is a difficult but not an impossible task. The tips shared here should get you on the right track, and provide military families sustainability against the unforeseeable future.