Saving for Uncertainty

Preparing For An Unsure Financial Future

Saving2-headerIn early 2014, worries about a government shutdown had a profound impact on military families, with many of them reducing spending or savings as a way to prepare for an uncertain future, according to a Military Finance Survey conducted by Harris Polling.

While the budget conflict was resolved, 2015 has started in somewhat similar fashion, but with an added twist: in addition to worries about federal spending and job security, there is also a new push to go after emerging terrorist threats overseas.

This has created a pair of conflicting futures—one in which the government lacks funds to adequately pay or retain military members, thus throwing the finances of some military families into turmoil; and another in which the military will be more active and see possible increases in deployments and bonus pay.

The good news is that these families can use the same financial strategies to set themselves up for success no matter what happens. And with 2015 Military Saves Week taking place from February 23-38, this is a good time to focus on what can help prepare military members: saving for uncertainty.

Saving for an emergency

If you open up a simple savings account and put some money aside for unexpected bills, it will add up quickly. Find places to save money in your budget and have at least $500 socked away; even better would be six months take home pay. The goal is to be able to take care of an unexpected bill (such as auto repairs) immediately, right then and there, rather than worrying about how to pay for it.

Saving for retirement

There are several types of federal Thrift Savings Plans (TSP) for those in the military, each with different rates of return. They are a good way to save for retirement thanks to compounding interest, which is when interest earns interest and helps your investment grow over time.

Just keep in mind that it takes patience and consistent savings over the course of years, so don’t panic! When a crisis hits, do not dig into your retirement unless it’s that or losing everything you own. Why? Well, take the fact that the market has doubled since plummeting in 2008. This means that you’ve likely made up what you lost (and then some) if you kept calm and carried on. Saving for retirement is a marathon, not a sprint.

Saving for a big purchase

We all find ourselves in need of something expensive from time to time, whether it’s kitchen appliances or new living room furniture, and often put such purchases on credit. But with the uncertainty of your paycheck floating above your head, saving up for that new item might be a better choice, financially speaking. For example:

  • Total cost with interest (15%) of putting $2,000 in new furniture on a credit card: $2,816
  • Total amount of time it will take to pay, making the 4% minimum payment: 91 months

But if you paid for it outright:

  • Total cost if you were to pay in cash: $2,000
  • Total amount of time it would take to save that cash if you put aside $100 per pay period: 10 months

So you can see that saving, rather than using credit, can save you hundreds of dollars in interest and takes a lot less time than you might think.

If you put a savings plan into place today, there’s a good chance that you’ll be prepared for whatever tomorrow brings. So don’t let your financial future be left to uncertainty—if you save early and save often, it’s more likely that you’ll find financial success in the long run.


About the author: Allen Usry

Air Force Chief Master Sergeant (ret) W. Allen Usry began his military career in the Marine Corps in 1982, and then went on to serve in the Oklahoma Air National Guard and United States Air Force. During his nearly 30 year career he service in a variety of positions including Command Chief Master Sergeant for First Air Force (CONR/AFNORTH) and as Command Senior Enlisted Leader (CSEL) for NORAD and United States Northern Command. Allen retired from active duty on 1 Jan 2012, and currently serves as a consultant for Pioneer Services, sharing his wealth of knowledge to military personnel around the nation.

Contact: Allen Usry


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