By Amy Miller, AFC®
I like these savings weekly themes and tips so much that I believe they are worth reviewing again so I’m giving them to you a second time this year. They are what I call “best practices” for savings and since this is Military Saves Month, I thought another look at them would hopefully get everyone motivated to take the pledge and get on track saving for your future.
This year’s Military Saves Month Pledge weekly themes are as follows:
Week 1: Savings Automatically
The easiest way to make savings a habit is by setting up automatic transfers. This can be directly
from your paycheck via direct deposit or by using online banking to set an amount to be transferred from your checking to your savings account on a set date. I normally recommend direct deposit if that is an option. Not all employers allow more than one transfer so if that’s not available, setting up a transfer through online banking is your next best option. If that’s not possible, take a trip down to your bank and ask for assistance.
Week 2: Save for the Unexpected
An Emergency Fund. We can all agree everyone needs one so start one if you haven’t already. This is where you will pull from if the washer goes out, a pipe breaks, you blow a tire, or worse, you become unemployed. The standard recommendation is 3-6 months’ salary. That may seem like a BIG number to many, so I normally recommend starting with a goal of $1,000.00 and working up from there.
Week 3: Save for Retirement
We all want to retire comfortably one day and recognizing the need to be able to pay yourself in retirement is the first step. The sooner you start planning the better and the better off you could be when the times comes. The easiest way to work toward this is to start by contributing to your 401K (or the plan that is offered by your employer, like Thrift Savings Plan – TSP) and taking advantage of employer contributions. I firmly believe that you should contribute at least what your employer matches, otherwise, you are leaving free money on the table.
Another way to prepare is to open an IRA and max the yearly contribution if you can. In 2022, that amount is $6,000 if you are under 50 years old. Over 50, you can add an additional $1,000 as a catch-up. Another suggestion is to delay social security if you are close to retirement. By doing so, you can increase the amount you receive each year in the future. This can also increase the amount your spouse could receive in survivor benefits.
Week 4: Save by Reducing Debt
We’ve talked about this a few times recently in relation to being financially fit in 2022. If this is on your radar, I encourage you to read a few of my blogs on this subject that covers ways to be successful. A few important steps to take is to know your debt to the penny on all accounts and then create a plan of attack through budgeting, cutting back, and increasing your income if necessary.
Week 5: Save as a Family
This is a chance to teach your children valuable money and personal finance lessons. Have a family discussion about saving and set money goals together. Talk about budgets and tracking expenses, find ways to save that everyone agrees upon like eating at home more, taking advantage of free entertainment, buying secondhand and how turning lights and water off can have an impact.
It is also imperative to discuss their own savings for the future with them. Is it change in a piggy bank, or do they have their own account? Discuss each day’s topic with them (age appropriately of course) and get them on the right path financially. Handling money and finances is a life skill that overwhelms many – I encourage you to equip your children to be able to handle their own finances wisely.
Take the Pledge! Start Now!
You can take the pledge here: https://ambahq.org/military-saves/