When I was on Active Duty, personal finance was something you figured out on your own. I think things are a little better now. Hopefully, you've been instructed on some basics. If not, here are four.
Make a Monthly Budget
One of the most important steps in ensuring financial success is creating a monthly budget. This may sound simple, but a budget is your financial strategy's foundation.
Creating a monthly budget doesn't have to be complicated. Here's how to ensure you're setting yourself up for financial success:
- First, calculate your gross monthly income. This could include your military pay and allowances, investment income, child support/alimony, freelance work, or other income sources. Remember to calculate your net income as well, which is how much is left after taxes and other deductions.
- Speaking of priorities, consider your financial priorities and allocate your budget accordingly. In addition to your regular monthly expenses, you might decide to increase your general savings or earmark money toward a large purchase such as a home or car. The important point is to decide what's important and to make sure your budget reflects those values.
- Finally, create expense categories for where your money is spent and track each and every expense. It's important to differentiate between wants and needs. You need to pay the rent or mortgage payment, but you want a new pair of shoes or a nice dinner out. By tracking your spending, you can determine whether your budget is aligned with your priorities or if you should make adjustments to meet your goals.
Check Your Credit Score
If it's been a while since you checked your credit score, now is a great time to see where you stand. Your credit score is an important metric when considering your financial health and will play a larger role when you apply for loans, especially mortgages and car loans. If you have a higher credit score, you may qualify for lower-interest debt, which will save you money.
Reviewing your credit report is important to ensure there aren't any mistakes or incorrect accounts assigned to you. If you notice something on your credit report that doesn't look accurate, such as a loan or credit card you don't remember opening, contact your financial institutions immediately. You can also file a dispute with the credit reporting agencies to report any false information you find.
Understand Your Investment Options
As you become more financially literate and feel comfortable talking about finances, you may consider looking into investments that are aligned with your goals. There are so many different types of investments and working with a financial advisor can help you understand your options. You should also educate yourself on some of the most common investment types, including:
- Cash and cash equivalents (like money markets and I-bonds)
- Mutual Funds
Don’t Be Afraid to Ask Questions
Talking about finances can be intimidating, but we all must start somewhere. This Financial Literacy Month, make it a goal to learn one or two new facts about finance and contact an expert who can help. You can turn to financial advisors and financial publications to get your questions answered without feeling naive or silly. There's no such thing as a dumb question when it comes to becoming more financially literate and secure.
Military Finances are Different
As you start out on your military journey, realize that your finances are different than a civilian. You have unique benefits and requirements. That's why we think you should work with a financial planner or coach that deals with military issues each and every day. Use the button below to schedule a free initial consultation to find out about the different services we offer (get an advance look here).
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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.