Money management is essential for everyone but especially people in the military. Service members are subject to a lot of external factors that can influence their finances, such as getting relocated or deployed. Military members should create a financial and saving plan to ensure they are always prepared for unexpected expenses. Here are some techniques on managing finances in the military to consider.
Create a budget and stick to It
Every solid financial plan starts with a well defined budget. Budgeting allows you to create an individualized spending plan that includes your essential needs and other expenses that are important to you. Following your budget is the best way to keep you out of debt. As a service member, there are financial resources you can use, such as the military’s free finance counselors, to help you with creating your budget. These counselors can suggest budgets based on your income and suggest the best credit card, such as an American Express credit card, for your needs.
Save money for a rainy day by eliminating unnecessary expenses
There is a lot of fluidity with military salaries—it is important to save money for unexpected expenses. There are a lot of “small expenses”—daily coffee shop trips— that can quickly add up. In and of themselves, these expenses often seem small; however, over time they can add up to be a lot more than you think. Saving the money you would spend on eating out or a coffee is a great way to accumulate savings.
Track your spending and assess ways to cut back
Tracking your spending is a great way in managing finances in the military. This helps to identify areas where you might be spending more than you think. When you go to buy your coffee and it is only four dollars, it might not seem like a lot, but tracking this over the course of a month will highlight how this could really add up. If you bought a four dollar coffee everyday, in one month, you would spend 120 dollars on coffee. Tracking your spending is a great way to highlight the areas where you could cut back your spending and put some money into your savings. If you are going to splurge, you should make use of military discounts.
Try to minimize recurring bills
Subscriptions are one of the biggest culprits of overspending. Many people subscribe to products or services without considering the cost over the long term. For example, paying 10 dollars a month for a streaming service can really add up over the long term. As income within the military can be volatile, it is important to try to minimize your subscriptions and recurring bills.
Avoid impulse purchases
Impulse purchases can destroy a budget. A great strategy for combating impulse purchases is to make a list of higher cost items that you want and incorporate them into your budget. Saving for bigger items over time is not only a smarter financial choice, but will give you a sense of justification when you finally do get to purchase that expensive grill or handbag. Additionally, incorporating higher cost items into your budget allows you to splurge without ruining your savings. Even with bigger items incorporated into your budget, the urge to buy expensive products can still arise. If you are shopping and want something that is not on your list, you should wait at least a day before buying— this allows you to determine if it is something you actually need.
Invest in your financial future
In managing finances in the military, it is important to invest in your financial future. So that when your time in the military comes to a close, you can live the life you want. Setting money aside for retirement is essential for long term financial stability. Consulting with one of the military’s financial counselors is a great way to create a retirement plan.
While it is important for everyone to manage their finances, service members are subject to a lot of factors that can influence their earnings and expenses. If you are in the military, it is important to implement money management strategies to ensure financial security.
Author: Kevin Devoto