How to Prepare for Military Cuts
May is a busy month for the military community! All month long, the U.S. celebrates National Military Appreciation Month, and also observes Military Spouse Appreciation Day and Memorial Day.
Let’s celebrate the military and military spouse communities with some knowledge to stay ahead of the curve!
A lot of financial changes are in motion within the military community. The Defense Department claims that there will be a continued reduction in troops, pay, and benefits, while commissaries are cut and Tricare fees will increase.
We’re always preaching the gospel of financial savings, and for good reason considering current events such as these. As you probably already know, one thing is constant in the military lifestyle: change. So, in your best scouting fashion, always be prepared.
Sure, it’s easy to hope for the best; but it’s always better to prepare for whatever challenges come your way. Of course, you hope your spouse won’t be handed that pink slip, but should that happen in troop reductions, make sure you’re in a position to make the best of your transition.
This is where one of the foundational financial principals to live by comes in handy: the 50/30/20 rule of personal finance.
This rule states that when dealing with your family’s total income, after tax, there are three primary areas you should use to manage your money.
The ’50′ refers to your family’s needs; in that, of this collective post-tax annual income, 50% should go towards the needs of your family. Needs include groceries, housing, utilities and insurance.
The ’30′ refers to the ‘wants’ of your family as a whole. This 30% of post-tax income includes your phone bill, cable, that sassy pair of heels you’ve had your eye on or new iPad your spouse has been drooling over.
And finally we come to the ’20′ area of the rule. This 20% will be the most important aspect of savings in the long-run for your family’s well-being. Twenty percent of your collective post-tax annual income should go to savings. Pay down debt, save for retirement and bulk up your emergency fund.
If you’ve been saving regularly, then you’re ready to face the higher Tricare bills, grocery bills and ready to take on civilian life should your family be met by downsizing.
If you haven’t been saving as much as you’d like, take a look at your current spending habits and try to shift your current lifestyle in a way that will allow your family to better prepare for life changes that come your way; and change is bound to happen one day or another. Many times, this change comes at you quicker than you’d think. New baby? New career? Retirement? Oh yeah, it will happen, so get to saving so you’ll be able to embrace and enjoy change!
If you need a boost in the meantime, check out AAFMAA’s Career Assistance Program (CAP) Loan options to avoid financial stress.