According to Military.com, “49% of military families have less than $5,000 in savings.” While in the military, planning for retirement is your responsibility. You can find a way to build a strong financial foundation for your family. If you have a current retirement plan in place with the military, keep that plan. Simply put, you start out by completing tasks that will improve your financial position. Follow these steps and tips to improve your financial position.
First, you need to get the proper insurance to protect you and your family. Insurance will cover expenses for premature death, health problems, or disability. Renewable term life insurance is affordable. You can renew this policy regardless of your health. Health insurance will protect you from expensive medical bills. Disability insurance protect you in case you have an injury and cannot work. Make sure you get these policies as soon as possible, and get enough coverage to protect you and your family. Manage your money.
Get out of Debt:
Next, pay yourself first. Set aside five to ten percent of your income to save for retirement. Reduce your expenses. Then, get out of debt as soon as possible. Pay off your small bills first and then attack the larger bills. Do not worry about the interest. Buy only what you need. Avoid wasting money on sodas, cigarettes, coffee, beer, new phones, expensive cars, partying, and unnecessary shopping. Distinguish the difference between what your family need and what they want. Start your emergency fund.
Then, create an emergency fund. You need to save in your bank three to six months of your income. If you take home $2,000 per month, set aside at least $6,000 in your bank for emergencies. One day, you might have an accident, car repairs, home repairs, or a sudden change in your employment with the military. Sudden unexpected expenses send military families in to debt. The emergency fund will prevent your family from getting into more debt. Small changes can lead to big money in the long run for all military families.
Invest Your Money:
Finally, military families can invest their money. Financial planning is not an exciting process. Please take care of your financial future. Make saving money a habit. If you save $10.00 a day at 8%, in 30 years your family will have $447,107. If you save $20.00 per day at 8%, in 30 years your family will have $894,214 for retirement. This is how you make money for your family. The key is to find a safe way to earn 8% on your money while protecting your money, growing your money, saving your money. Do not invest money into financial products that you do not understand. The is not financial advice. This article is written to inform military families.
Jacques Piccard is the Co-Founder and managing director of Davenport Laroche.