Military Saves Week 2016 is fast approaching!
Every year, military installations and organizations around the world join forces to motivate, support, and encourage service members and military families to save money, reduce debt, and build wealth through a week of financial focus and education.
“I’m a big fan of the Military Saves Campaign,” said Lt. Col. Michael McPherson, 412th Comptroller Squadron commander. “When people talk about personal finance there is always a good deal of focus on investing and getting a good rate of return. A 10 percent return on investment is considered a good rate, but what people don’t think about is that we can do a lot better if you simply apply the logic from Benjamin Franklin, ‘A penny saved is a penny earned.'”
Since 2007, more than 200,000 savers have accepted the challenge of Military Saves Week. What is that challenge?
The Military Saves Pledge. The pledge is a commitment to exercise good financial habits, improve financial readiness and encourage other Americans to do the same.
“I will help myself by saving money, reducing debt, and building wealth over time. I will help my family and my country by encouraging other Americans to Build Wealth, Not Debt.”
Military Saves encourages all service members, their families and civilian employees to take the Military Saves Pledge, and to “Set a Goal. Make a Plan. Save Automatically.”
Step 1: Set a goal
Why is a goal important? If you don’t know what you’re saving for, you haven’t established what you won’t spend it on. By saving for a car down payment, you’ve established that you won’t spend that saved money on a new TV instead. When you take the Military Saves Pledge, you’re asked to identify a savings goal. The top two goals selected by our savers are:
* Saving for a rainy day with an Emergency Fund
* Saving for Retirement
If you have another goal in mind, that’s OK — in fact, it’s GREAT! The important thing is that you have a goal, and that you commit to it. That’s what the Military Saves Pledge is about — deciding what’s important to you, and taking action. One small step can lead to another, then another, until your goal is met.
“If we can cut costs by doing without a few amenities or looking for sales and coupons to purchase the things we already buy, we can do a lot better than 10%,” said McPherson.
Step 2: Make a plan
To take action, you need to save money. How do you go about doing that?
This may be the most difficult part of the challenge — finding money to save. It’s most likely in your paycheck (somewhere) — the problem is that so many priorities are fighting over the same dollars. Housing, transportation, food — all are essential needs that MUST be met.
However, when something is a priority, you plan for it. Plan to save for your goal, whatever it is, just like you plan for your rent, for your car, and for your groceries. To do that, create a budget or spending plan for your monthly expenses. Assign each and every dollar of your paycheck to a category – including savings. By including savings in your monthly spending plan, you’re committing to paying one very important bill – to yourself.
“It does mean practicing good financial habits, and to that end, I encourage everyone to make themselves knowledgeable about personal finance,” said McPherson.
He recommends reading a good book on good financial practices. One of his personal favorites is, “The Millionaire Next Door” by Thomas Stanley.
Step 3: Save automatically
The theme for Military Saves Week 2016 is “Make Savings Automatic.” Automating your savings will allow you to save regularly without having to think about it. Here are four ways you can set it and forget it:
* Contribute to the Thrift Savings Plan and have a portion of your paycheck transferred into your retirement account before you get paid. Many other employer retirement plans offer a similar option – simply decide how much you want to contribute each month to meet your savings goal.
* Set up allotments via myPay. Designate an amount go to an account that is separate from a regular checking account – preferably a savings account! If you are paid through a different system, your employer may still allow you to divide your paycheck into different accounts.
* Set up regular transfers using your financial institution’s bill pay system. Automatically transfer money from a checking account to a separate savings account each payday.
* Tax time is a great opportunity to save for those who receive a refund. Use Form 8888, Allocation of Refund, to direct deposit your refund in up to three different accounts — make sure one is a savings account! Another incentive to this option? Visit SaveYourRefund to learn how saving at least $50 of your tax refund could win you $25,000 in 2016!
Military Saves Week 2016 is Feb. 22-27; one week out of the year to focus on paying yourself first by saving.
Your installation or an organization near you may be participating in the week offering educational workshops, events, and resources to help you meet the challenge of saving. Take advantage of these opportunities and build your financial knowledge and ability. Only you can accomplish each step of the challenge: it all begins with the Military Saves Pledge and making the commitment to save.
Military Saves, managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support servicemembers and military families to save money, reduce debt, and build wealth. Learn more at www.militarysaves.org.