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4 Tips to Increase Your Family Cash Flow

Military Pay and Benefits

All too often military families, as well as others, will tend to live beyond their means with more money going out on a monthly basis than they have coming in. By improving your cash flow, you can tackle debt, stop living paycheck to paycheck, be ready for emergencies, and save for future purchases and goals. To help increase your family's cash flow try following the four tips below.

1. Create a Solid Spending Plan

One of the biggest problems that many military families face is failing to maintain a spending plan properly. What often occurs when you create a spending plan is you use generalizations and make guesses at what you think you spend or estimate what you might spend. The other mistake you might make when creating your budget is making too broad of categories or not including enough. Start with a preliminary budget making sure to include items for expenses that may be recurring even if it's not every month. This will include items such as gifts, repairs and maintenance, clothing allowance, charitable giving, and holiday spending. Once you have created your budget record all of the money you spend for the next few months being sure to place them in the proper category. You may want to use an automated system such as Mint to track your spending.  C.L. Sheldon clients have the option to track spending through a service we provide.  Once you have totaled these numbers, you will be left with a much more realistic view of where your dollars are going and what categories you might benefit cutting back on.

2. Consider Right Sizing

Military members are forced to move every few years. This can cause "creep" in your housing expenses.  Make sure you don't end up house poor when you make your next PCS. Or, if you are house poor already, fix it on your next PCS.   If you are in extreme debt, you might want to consider downsizing some of your larger expenses such as your vehicle, your home (if you're a retired military officer), or any recreational vehicles or boats. To make minor changes, you can consider ridding yourself of unnecessary items by selling them and using the cash to help pay down debt and reduce your monthly bills.

3. Reduce Your Monthly Costs

Monthly expenses can grow over time becoming large bills that can be difficult to keep up with. Take a close look at all your bills and consider ways in which you can reduce these costs and what expenses you can do without. Look at bills that are not high priority such as cable and phone bills and see if you can reduce costs by eliminating unnecessary additions or contact your company and see if there are any promotional packages or cheaper options. If your utility bills are a large part of your expense find ways to save energy around your home such as setting your thermostat for times you are away and trying water conservation techniques. Costs of fuel can also be a monthly expense that may be able to be reduced by carpooling or utilizing public transportation. Start with any cuts you can and see if the reduction helps increase your bottom line. 

4. Find Ways to Increase Your Income

If you have made attempts to clean up your spending plan and reduce your monthly costs and still find yourself coming up short every month, it might be time to consider ways in which you can increase your income to cover the expenses and end up with some cash at the end of each month. You can consider taking on odd jobs, part time work or find ways to use your talents to take on additional work at home. Just make sure you understand the tax consequences of the additional income.  Only your military compensation is protected under the Servicemembers Civil Relief Act.  If you are a Texas resident (with no income tax) but are stationed in Virginia and you earn income form a civilian job or self-employment, you are required to report that income to Virginia as non-resident income.

Controlling Cash Flow Can be a Problem for Military Officers Too

Military Officers have a pretty good total compensation package.  But with competing demands like housing expenses, putting the kids in private school and challenges, like remote assignments, you can quickly find yourself upside down on cash flow.  If you find yourself if this situation try the tips above to help reduce your monthly expenses and improve your family's cash flow so you can get a handle on debt and stop living from payday to payday.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.


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