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Military Finances 101: Focus on What You Can Control Thumbnail

Military Finances 101: Focus on What You Can Control

Managing Your Finances

By Joseph Brown, PhD, CFP©

Have you ever felt overwhelmed by financial uncertainties that seem beyond your control? While there are indeed many external factors, there are also numerous aspects of your finances that you can directly influence. Let's explore some of these areas and how you can start managing them effectively.

Establish an Emergency Fund

One of the most crucial steps in financial planning is establishing an emergency fund. Typically recommended to cover three to six months of expenses, this fund serves as your safety net when unexpected expenses arise. Whether it's a major car repair or a sudden medical bill, having an emergency fund can turn a potentially catastrophic situation into a manageable one.

Save For Your Future

Investing in your future is another key aspect of financial control. Consider contributing to employer-sponsored plans like the TSP or 401(k), as well as an IRA. The amount you should save depends on various factors and aiming for 15 to 25% of your gross pay is a good rule of thumb. Automating your savings is crucial; this ensures that your contributions are consistent and not subject to forgetfulness or hesitation. If you're unsure about investment options, a lifecycle fund aligned with your retirement age is a common choice. The DOD currently uses this approach for the TSP, providing a solid foundation for military personnel's retirement savings.

Spend in Alignment with Your Values and Goals

Furthermore, it's essential to identify your values and goals and use them as a guide for financial decision-making. Your values and goals are unique to you, and there's no right or wrong answer. If travel is something you value but haven't prioritized, perhaps it's time to reevaluate. On the other hand, if investing in health-related activities brings you joy and fulfillment, that's a clear indication of your priorities.

It's easy to feel powerless in the face of external circumstances, but you have the power to take control of your financial future. Establishing an emergency fund, saving for retirement, and aligning your spending with your values are all within your reach. We're here to support you on this journey, helping you make the most of your life and financial resources.

Military Finances are Different

Emergency funds, saving for the future, and spending in alignment with your values and goals apply equally to Active and Retired Senior Officers and NCOs as it does to civilians. However, as a military member, you have unique benefits and opportunities that your civilian counterparts may not have. Some financial strategies that were feasible during your active duty may need to be adjusted after retirement. That's why you should work with a Financial Planner or Advisor who specializes in military financial situations. They can provide tailored advice that considers your specific circumstances, helping you make the most of your military benefits and plan effectively for retirement. If you're interested in learning more about how we can assist you, feel free to schedule a free initial financial planning meeting using the button below.

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