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Military Finances 101: 8 Step Summer Financial Checkup

Managing Your Finances

Summer is here and PCS season has begun. When your circumstances change, there is often the opportunity to evaluate where you are. While it's best to check the following 8 "steps" every year, if you can do it every time you PCS, you'll be ahead of most Americans.

Step 1: Analyze Your Spending Plan

In 2015, approximately 38 percent of Americans were breaking even with their spending, while 18 percent were spending more than they were making.1 An effective way to avoid spending more than you’re earning is to step back and take stock of your monthly and annual spending plan. And if you don’t have a plan at all, use this time to make one

Many credit cards or banks will offer categorical breakdowns of your spending, which can be a great way to find out what you’re spending the most money on and if there’s room to cut back. Determine which expenses are truly essential and which are optional. Look to reduce the optional expenses. To get the best look at your spending habits, you may want to evaluate your savings and spending record over the past six to 12 months. 

Step 2: Seek Out Tax Savings

Your tax return is a little like your OPR/OER/FITREP. You "write" it yourself by what you do with your money. Your tax return just reports it. This year, try taking a different approach to tax season by evaluating your tax-saving strategies early. You may want to work with your financial planner or tax professional to create a mock tax return, as this can help you understand your withholding options and tax-saving opportunities such as TSP and IRAs.

Focus on filing any time-sensitive deductions and brush up on changes in tax laws. Reaching out to your tax professional now could mean you have more time to prepare and strategize together for next year’s returns.

Step 3: Tackle Your Debt

An alarming one-fifth of adults roll over $2,500 in credit card debt each month.2 If you’re guilty of putting off managing your amounting expenses, now’s the time to start planning to pay it off. While most consumers have some amount of good debt on their plate (mortgages, car payments, etc.), it’s the bad debt (credit card debt, student loans, etc.) that you’ll likely want to focus on managing and eliminating

While you could be tempted to simply pay off what shows up on the bills each month, you may want to create a debt summary to get a better idea of your total debt’s big picture. By creating an annual debt summary, you and your financial advisor can better understand whether you’re gradually working down the amount or falling farther into the hole.

Just in case you need a reminder, your debt load and credit report affect your ability to get a security clearance. The DoD is now monitoring credit reports "continuously" not just when you update your SF 86.

Step 4: Revisit Short and Long-Term Goals

A lot can change since your last PCS - marriage, death, divorce, and growing your family. Even seemingly small adjustments, like a promotion or sending a kid off to college, can have a significant impact on your financial status. That’s why it’s important to regularly review your long-term goals and progress towards them while revisiting and evaluating your shorter term goals as well. 

Step 5: Evaluate Coverage and Providers

As you’re reviewing your spending plan, take the extra time to thoroughly evaluate your new providers and coverage options. This includes your internet, cable and wireless service providers in addition to your insurance coverage options. Don't sign up for services you did use at your last duty station and check to make sure you're not getting insurance you don't need just because you moved to a new state and the coverage is "opt-out".  

Step 6: Reassess and Rebalance Your Portfolio

It’s important to visit your portfolio and risk tolerance regularly to help keep it in line with your tolerance, goals and market conditions. While most managed portfolios will be rebalanced automatically, it’s important to take stock of your investments’ big picture. Doing so can help you determine if you need to diversify differently or reassess your risk tolerance.

Step 7: Review Your Retirement Savings

Whether retirement is decades down the line or within the upcoming year, reviewing your retirement savings on an annual basis is a great habit to start. If you're covered by the Blended Retirement System, it is critical to make sure you're contributing enough to TSP to get the full government match. If you can, contribute more or contribute to a Roth IRA.

Step 8: Assess Your Estate Plan

It’s not fun to plan for the worst case scenario, but leaving your family with an outdated will, trust or estate plan can lead to some major issues down the line. As you assess your legacy plan annually, make sure you’re accounting for any newly acquired assets (houses, cars, pets, etc.) while checking that your designated representatives are still willing and able to assist in the event of your passing.

PCS time can be busy, but there usually is some down time when you're starting to spin up. Life changes are a great time to check on how things are going.


If you liked this article, you might enjoy the following blog posts:

5 Ways for Military Officers to Stay Financially Fit

6 Books Junior Military Officers Should Read to Learn About Investing

5 Financial Goals for Junior Military Officers


1http://www.usfinancialcapability.org/results.php?region=US#managing-financial-products

2https://www.nfcc.org/clientimpact/2017-financial-literacy-survey/

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