Being in the military is a lot different than your traditional 9-5 civilian job, and because of this, some find it hard to save on a Military paycheck.
Because money is such an important part of your future, you will want to make sure it’s being spent in the right places. If not, you could find yourself in some serious debt when you do decide to leave or retire. Remember, once you’re done with the military, you no longer will have housing, food or other perks the service may bring you. This all adds up!
To help you better prepare for your future, here are seven easy to apply tips you can do as early as this week to help you save the most money as possible.
- Start Tracking
This sounds simple, but sadly, most of us don’t do it. The very first thing you will want to do is track your money every month. Whether it’s on your smartphone, a spreadsheet or on a piece of paper, tracking every single dollar will show you where your money is going. You may find out you’re spending $250 at the bar each month, when in essence, you can only afford to spend $40.
- Pick a Number
It’s time to pick a number you want to take out of your monthly pay and stick to it. When you treat your savings like a bill and automatically transfer it to another account, this is a great way to save your money fast. Whether it’s 5, 10 or 20 % of your paycheck, set up an automatic withdrawal to a separate account.
- Minimize Expenses
If you’re staying on base, this can be a great money saver since you won’t have a high rent bill. However, if you’re spending your money elsewhere, it’s time to analyze these spending habits. For example, is your cell phone bill higher than $100 for just yourself? If so, you may want to look at cheaper alternatives, such as Google Fi, to help you cut that bill in half. Look at each bill and research online to see if you can cut it. Cutting each bill by 10-20% could save you hundreds a month.
- Thrift Savings Plan
Those who are in the military are able to take advantage of a Thrift Savings Plan. This plan comes as two options: the traditional and Roth. The traditional contributions come from your pay before it is taxed, while the Roth will come from your pay after it has been taxed. If you haven’t signed up for a Thrift Savings Plan yet, you may want to consider this option as it’s a great way to save on taxes in the future.
The TSP is the most preferred option for most military members, but eventually, if you hit the contribution limits, you may want to consider investing in an IRA. Like the TSP, an IRA can come in two common types: the traditional and Roth. Each one has its own advantages, so it’s up to you to decide which option will help you financially. A conventional IRA will allow your money to grow tax-deferred, while a Roth is similar to a Roth TSP. The goal here it to maximize both your TSP and IRA, and if you treat each like a bill, this is a wonderful opportunity to invest and have a nice nest egg set aside for your retirement.
- Other Options
If you don’t feel comfortable with investing in mutual funds or stocks yet, consider parking your money in a short-term CD. These CDs offer a higher interest rate than a savings account and you won’t lose your principal. You don’t want to let your money sit in a basic bank account collecting less than 0.01%. If you don’t plan on touching this money for six to 12 months, look at popular banks such as the USAA or PenFed Credit Union.
- Stay at the Barracks
While the barracks may not sound like an awesome place, it will save you a ton of money. Make sure you stay at the barracks for as long as possible to avoid those high rent bills. Plus, the great thing about barracks is that it will be located right where you need to be, helping you avoid a commute.
As you can see, saving money in the military can be done. By taking action and applying these tips, there’s no reason you can’t have a healthy financial future.