Image courtesy of U.S. Department of Defense
Many in the military community intend to do better with money “this year.” That may be because of your own drive or because someone in your leadership is telling you to “fix your money situation.” Either way, getting your finances organized in the new year is top of mind.
But where do you begin? How do you take action to “be better” with money? Taking action can be intimidating for some, so here are the six steps Servicemembers need to get financially squared away this year!
First things first, you need to wrap your mind around the fact that some things are going to be changing. And change isn’t always a bad thing. In fact getting your money in order and organized is a good thing.
So keep a positive, can-do attitude moving forward. Being in a good head space will make it easier to stay focused on the task at hand, getting your financial life organized.
The beginning of the year is the perfect time to get a free copy of your credit report from AnnualCreditReport.com. Your credit report is a great place to begin getting organized.
First, check the report to ensure everything is accurate. If you find inaccuracies, you’ll want to investigate and correct those errors.
Next, review all your debt payments. Sometimes Servicemembers’ debts can get lost in the shuffle of moving frequently resulting in late payments and negative items on your credit report. When you have a security clearance, that is precisely what you don’t want to happen. See our related article about credit mistakes veterans make.
Armed with the information from your credit report, the next step is to get a clear picture of the money you have coming in and the money you have going out.
To keep track of your income and expenses, you need to have the information all in one place. List all of your income from jobs, side hustles, child support or alimony. Create a second list of all of your expenses like rent, food, utilities, and debt payments.
Find a method that works best for you - not your best friend or your Dad. You have to find a method to track your money that you will like (as much as you can like budgeting) and use. If you do not, the likelihood of using it goes down considerably.
Some examples of getting it all on one page would be to use a notebook, budgeting apps (like Mint or You Need A Budget), Excel or a Google sheet. Anything can work as long as all of your income and expenses are in one place.
Unexpected financial issues or situations are going to pop up each year. Sometimes the only way to manage those situations (urgent car repair, for example) is to be sure you have money in general savings or an emergency account.
But you can anticipate other situations that may arise from potential temporary duties, deployments, military schools or a permanent change of station (PCS). Think ahead and set some money aside for the more likely scenarios.
The easiest way to organize your financial life and to keep it organized is to automate. Set automatic bill payments through your bank to ensure your bills are paid on time.
You can arrange automatic transfers from checking to your savings or set up an allotment in your MyPay account to send money to your savings each month.
And don’t forget you can set-up automatic payroll deductions to save money for your retirement through your Thrift Savings Plan or a 401(k).
Lastly, for the things you can’t automate, you need to make time to stay organized. Set reminders in your phone or mark your calendar to pay bills, file papers, or input information into your budget.
The frequency of your organizing time depends on your unique situation, but for many people once every two weeks or once a month is sufficient.
Getting your finances organized in the new year will help your financial life run more smoothly and enable you to make better financial decisions in the moment. So start your year off right by getting your finances organized!
Lacey Langford is an Accredited Financial Counselor® and a candidate for CFP® certification with over ten years experience in financial counseling and coaching. She served four years in the U.S. Air Force and holds a B.S. in Business Administration with a concentration in finance as well as an Executive Certificate in Financial Planning from Duke University.
Cpl. Ivanska Carrillo of the 210th Regional Support Group, Aguadilla, Puerto Rico, works at her computer at Fort Bliss, Texas in 2018. U.S. Army Reserve photo by Sgt. Christopher A. Hernandez/ Mobilization and Deployment Brigade, DPTMS Fort Bliss. The appearance of U.S. Department of Defense (DoD) visual information does not imply or constitute DoD endorsement.