Financial education - a skill young people desperately need - isn't taught in high schools. So for many military personnel, they enter the military without any knowledge on how to handle their finances. This can lead to financial problems and military debt since it's the first time many of them have to make financial decisions for themselves.
This lack of financial education is evident in a recent Associated Press report stating that thousands of U.S. troops are being banned from serving overseas because they are deep in debt. Because of this high level of debt they are considered security risks. On top of that, many unscrupulous payday lenders are taking unfair advantage of many members of the military by charging them fees and interest rates that make it almost impossible for them to get out of the hole.
You can become financially secure in the military with some simple steps. The tips below will put you on the path to financial freedom.
1. Cut your expenses. To afford the items you would like to purchase, start by listing everything that you want to buy in the order you want to buy them. This will help you focus your spending on the things you want the most.
To eliminate needless waist, monitor what you spend money on for a few weeks. Find out where you spend your money by writing down everything you purchase. If you're spending four dollars on a cup of coffee during the week that adds up to more that $1,000 a year. It's a great way to find out what small daily purchases add up to big expense.
Develop a military budget by writing down your take home pay and listing your current expenses. If you're spending more than you make, it's time to cut those expenses or work extra hard to get that promotion.
2. Create a savings plan. The average American spends more than they earn, so become a money rebel and save money. With a simple investment plan, just by saving $250 a month starting at age 18, you could reach millionaire status by age 40.
Get in the habit of paying yourself first. Have your bank automatically transfer a portion of your money from a checking account to a savings account or start an allotment directly to your savings account. Each time you deposit your paycheck, money is automatically transferred into your savings before you have a chance to spend it. That way you'll have military money set aside for the long-term and available for the things you want to buy now.
Many of you are serving the country overseas now in hostile territory and earning hostile fire and imminent danger pay. You'll find this is an ideal way to keep more money in your pocket. Take advantage of the military programs such as TSP (Thrift Savings Plan) and SDP (Savings Deposit Program) that allow you to save military money and earn a higher return when compared with most civilian savings accounts. By simply setting that military money aside, it will help you to have money in the bank and a way to treat yourself when your return for a job well done.
3. Have the government buy your home. You can become a homeowner using the benefits the military offers. VA loans allow you to borrow 100% of the purchase price which means you won't need money for a down payment in most cases. Combine that with BAH (Basic Allowance for Housing) for civilian housing and you can have your mortgage payments paid for.
This is a huge benefit because you purchase a $100,000 home your property could be valued at over $570,000 in 30 years. The best part is using BAH you could of not even made a payment with your own money.
4. Invest in yourself. The military offers education benefits through the G.I. Bill, VEAP (Veterans Educational Assistance Program), LRP (Loan Repayment Programs) and TA (Tuition Assistance) may all help you to get a higher education. Just like in the civilian world the higher education you receive the more likely you are to get promoted and paid more.
You defend this country to protect the freedom of all American's; and you deserve to be financially free to live the lifestyle you want without having to worry about military debt. The tips above will help you avoid the shackles of life long debt and put you on the road to financial freedom.
If your under thirty year old retirement may seem like a long way off; however this is a important time to begin retirement planning. And the sooner young members in the military invest the easier it will be for them to retire young. The simple lessons below will have you on the road financial security and, equally important, will allow you to fully enjoy life now. You can become financially secure in the military while you're young with some simple steps. Follow the simple suggestions below and be on your way to and early military retirement.
1) Invest - Get that military paycheck working for you immediately. The sooner you begin to invest the sooner you can plan to retire young. By investing young you are able to harness the power of compounding interest which is a great ally in achieving your objective of an early retirement.
'Compounding interest' is earning money from the profits of your investments. So you're making money off money you did not have to work for. This offers young military members a tremendous advantage. In fact, investing as little as $100 per month starting at age 18 could make you a young millionaire well before you reach retirement age. Plus it will give you the ability to do the things you like to do while keeping on track to retire young.
2) Consistent investment plan - Investing on a consistent basis will allow you to generate long-term gains over time. For most in the military this consist investing over time may allow you to retire young. Start to follow a consistent investment plan now; then as your investment knowledge grows you can add other forms of high-return investments.
An ideal investment for young military personnel ready to retire young is low-cost broad market index investments. Warren Buffet states, "A very low-cost index is going to beat a majority of the amateur-managed money or professionally-managed money." This is one of the easiest investments you can make. An added bonus is that it takes only minimal knowledge and about 60 minutes to start getting your money working for you.
3) Diversification - Diversification lowers risk. If you have all your money invested in the stock market, and the market crashes, you could potentially lose a lot of money. Now if you had a portion of your money invested in stocks, some in real estate, some in businesses and some in other alternative investments - if any one of the markets corrects itself, you wouldn't get hit as hard since you're diversified.
4) Tax benefit vehicles - By using investment vehicles that give you tax benefits you'll be on the road to retire young. A Roth IRA or other form of retirement account can be a key investment vehicle that will allow you to reduce taxes. Many people don't realize about 40% of your income goes to pay taxes. So by choosing an investment vehicle like an IRA may help to keep more money in your pocket.
To secure your early retirement, immediately begin a consistent investment strategy. Being diversified and using investment vehicles that provide tax benefits will help to supercharge your returns. Get started now because you'll be able to afford the things you want now and in the future.
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