Financial Planning?
Having the ability to anticipate certain twists and turns in our possible financial future help us feel more in control. If something does happen we find ourselves glad we planned for “something like this”. Things you can do to plan your finances are: make a budget, save and make wise investments, start saving for retirement early and purchase different insurances that strengthen your control of your family’s financial future. Good financial management can help you:
1. Make the most of the money you earn 2. Dot the things that you like to do in life 3. Have enough money to live comfortable now 4. Have enough to not worry about when you are ready to retire
What are the potential problems of not budgeting? Rising debt can be a potential problem. If you don’t pay bills on time, you will lose things, like your car, your furniture, or your home. Any loan you may have that is secured by a physical object could be repossessed if payments aren’t made to that loan in a timely manner. If your creditors report a non-payment your credit rating will be damaged. Your pay can be garnished to ensure payment to your creditors. If your military job or your civilian employer requires a security clearance, that clearance could be in jeopardy. You could face loss of privileges, lose the ability to re-enlist, or even be released from your job. Setting Up A Personal Budget Here is a list of things to consider when setting up your personal budget. Income Effective budgeting requires that a soldier make certain that he or she is receiving all the pay and allowances to which he is entitled. Typically, a married enlisted soldier living off-post should be receiving base pay, basic allowance for housing (BAH), and basic allowance for subsistence (BAS). Take note that the BAH rate is paid based on the location, so it will vary from post to post and even from year to year. BAS replaces the soldier's meal card and is paid only when the soldier is not being fed in the form of rations. Therefore, BAS payment could stop immediately if the soldier is deployed, goes into the field, or goes on an unaccompanied tour. DO NOT INCLUDE BAS AS INCOME WHEN BUDGETING. This amount should be used for savings or to pay extra on debts. DO NOT INCUR NEW DEBTS OR EXPENSES THAT CANNOT BE PAID WITHOUT RECEIVING BAS.
In May 2001, some soldiers, especially junior enlisted married soldiers, became eligible for the new Family Subsistence Supplemental Allowance (FSSA). This allowance can provide a substantial increase in income to help feed your family Most of the deductions from pay are beyond the soldier's control, with the exception of income tax withholding. It makes little sense for a soldier to have excess income tax withheld and then receive a huge refund the next spring. Shelter While everyone has a different financial situation, soldiers can usually plan to spend between $500 and $650 per month for rent. This assumes that utilities are paid separately. When searching for a place to live, be very careful to choose a location that you like. If you sign a lease you may want to consider including a military clause within that contract. Utilities will probably cost $100-150 per month, not including telephone. It is important to set some rules on long-distance calling. This cost can get out of hand with just a few long distance calls. Food Very few families know how much they actually spend on groceries. Even though most groceries may be bought in one or two trips to the store, it is hard to keep track of the many trips to pick up milk, bread, etc. The Department of Agriculture periodically publishes a table of estimated cost for food at home. A simplified version of this table would allow $225 per month for two adults and an additional $50 per child. Older children are treated as adults and get $100 per month. Your family needs may vary, but this is a good starting point. Cars Before buying a car, get some professional advice. Remember, the guy at the dealership sells cars everyday and you only buy one every few years, so you need all the help you can get. Auto Insurance You won't have much say-so on this one if you already own the car. The type of car, the driver’s age, sex, and driving record determine rates. Insurance costs may vary greatly from one geographical area to another. Liability insurance is usually required by the state. Take note that the minimum amounts of liability coverage required by many states are unrealistically low. You will need to have more than the minimum to cover the cost of any serious accident. Collision and comprehensive coverage is required by the lien-holder on the vehicle. If the vehicle is paid for, you may be better off dropping this coverage on older vehicles. Other Auto Expenses
Most people spend much more than they think for gasoline. Try to limit driving, combine trips, and keep the vehicle in good working order. Even small things, such as proper tire inflation, can help save money. Look to the Auto Craft Shop and other alternatives for routine maintenance. Clothing Investigate clothing exchange programs, consignment shops, and other sources for clothes, especially for kids. No matter where the clothes come from, they still must be washed. Depending on number and ages of children, the typical family will spend $20-40 per month washing clothes at a laundromat. Entertainment Junior enlisted families must find ways to get the maximum for their entertainment dollar. Going to a matinee, sharing a family size popcorn, and sharing co-op babysitting are easy ways to save a few dollars. Some entertainment, such as going to a park or for a walk, are still appreciated but cost nothing. While some people think that cable TV is a luxury and should be eliminated from tight budgets, it is still a great entertainment value if used in lieu of more expensive options. Without premium movie channels, cable TV typically costs less than one dollar per day! Debts YOU CAN'T AFFORD IT!!! Of course, many Army families start out with some debts, and your only option is to pay these. Do not go out and run up new debts for items, which are not absolutely necessary. A bed is necessary a stereo is not! We live in a society that believes in instant gratification, having it all right now. On a soldier's pay, especially lower enlisted soldiers, with a young family, you cannot have it all now without having the debts to pay for years. Keep in mind that all the stuff your parents have took years to get, so why should you expect to get all the same stuff in six months? Also keep in mind that it will take about seven years to pay off $1000.00 charged on a typical credit card if the minimum monthly payments are made.