Saving for Your Future
Celebrating 2017 Military Saves Week
March 3, 2017 by Jake Butler
Saving money isn't always easy, but it is important. Even busy military families can utilize a few simple financial strategies to set themselves up for long-term financial security. With 2017 Military Saves Week taking place from February 27 through March 4, this is the perfect time to focus on what you can do to help yourself.
Saving for an emergency
If you take the time to open a savings account and put some money aside for unexpected bills, it will add up quicker than you think. Find places to save money in your budget and have at least $500 put away; even better would be six months of living expenses. 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. Due to compounding interest, they are an excellent way to save for retirement, where your account earns interest and helps your investment grow over time.
Keep in mind that it takes patience and consistent savings over the course of years. When a budget crisis hits, avoid digging into your retirement unless it’s absolutely necessary. Saving for retirement is a marathon, not a sprint.
Saving for a big purchase
We all find ourselves wanting something big, shiny and expensive from time to time, whether it’s a kitchen appliance or new living room furniture, and oftentimes we put such purchases on credit. But with the uncertainty of budget emergencies or everyday living expenses 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, could save you hundreds of dollars in interest. It also 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.