Preparing for financial emergencies
simple advice for
military families
This article is an excerpt
from the
Military Spouse Finance Guide:
Financial Advice for the Homefront, a recently published book from
Pioneer Services. With forewords by
Sylvia Kidd of the Association of the United States Army and Command Sergeant
Major Roger Stradley (Ret) of USA Cares, Inc., the Military Spouse Finance Guide
provides real-world advice for military families wanting to take control of
their money, rather than having their money control them. To get additional
information, or to order a copy of the guide directly from
Amazon.com.
One of the most
important steps for financial independence is being prepared for unexpected
bills. And the best way to do that is to create an Emergency Savings Account (ESA).
This is important because it prevents you from having to finance car repairs, a
trip home to see family, or other expenses.
The need for an ESA
In a survey of active-duty military personnel by
the Rand Institute, military families were asked if they had any financial
difficulties within the last year. Some of the questions included whether or not
they had bounced a check, fell behind on their bills, had to borrow money from
family or friends to help make ends meet, or even if they had their car
repossessed. More than half of the junior enlisted ranks (E1 to E4) reported
having one or more of these difficulties. Noncommissioned officers (E5 and E6)
had also experienced such problems, with 40 percent saying they had encountered
difficult financial situations.
Most of these
money woes could have been easily avoided, however, by having an ESA.
the
amount of your ESA
Deciding how much to set aside is unique to each
family—there is no hard and fast rule to determine how much is needed. Some
experts have recommended a flat $500, while others have recommended three to six
months living expenses. Regardless of what you choose, the point is to be able
to pay for all of your family’s bills for at least two months should all sources
of income become unavailable.
One of the few
rules that everyone agrees on is to “pay yourself first.” This means savings
comes first, before the nonessentials are bought and before the vacation is
planned. But where do you find the money? Where are the hidden savings?
There are a few
tips that can save you money almost every day:
-
Save on
groceries by planning and clipping coupons; it can save you $250 a year.
-
A “change
jar” can easily net $100 or more each year.
-
Pay cash
whenever possible to save yourself thousands in interest.
-
Increase
insurance deductibles and potentially save hundreds of dollars each year.
-
Eliminating
two fast food meals per week can save more than $500 each year.
-
Deposit your
spouse’s reenlistment bonus in your ESA, thus building it quickly.
These tips are
only the beginning—there are many ways to save enough money to prepare for your
financial future, so think of creative ways to find extra money each month. And
when you add all those up, you can easily have anywhere from $500 to two month’s
salary set aside relatively quickly, letting you move on to your mid- and
long-range financial goals.
5-10 minute Online Personal or Debt Management Loan Application
Deciding on the type of account
Your ESA should:
This can include
savings accounts, money market accounts, or money market mutual funds. Remember
that while Treasury bills and Certificates of Deposit are relatively safe and
secure options, they take longer to access and you may not get their full
benefit (i.e. interest) if you withdraw money before they mature.
No matter what
type of account you choose, consider having your spouse make the deposit via
allotment. Doing so makes the deposit automatic and is a key part of the “pay
yourself first” philosophy.
With adequate
emergency savings, you can focus on how to best meet your family's needs, rather
than worrying about finding the money to handle difficult financial situations.
Once an ESA is established, your family can apply those same savings habits
toward longer-term investments or Thrift Savings Plans, and start down the road
to financial success.
To find out more information about loans and other Pioneer Services, visit
PioneerMilitaryLoans.com.
About the Military Spouse Finance Guide:
The
Military Spouse Finance
Guide covers a wide range of topics, provides real-world examples, and is full
of easy-to-follow financial tips. To further Pioneer Services’ support for
military spouses and their families, all proceeds from the sale of the book will
benefit a military-family-based non-profit organization.
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How do I get my free
annual credit reports?
An amendment to the federal
Fair
Credit Reporting Act requires each of the major nationwide
consumer reporting companies to provide you with a free copy of
your credit report, at your request, once every 12 months.
To order your free annual report
from one or all the national consumer reporting companies, visit
www.annualcreditreport.com,
call toll-free 877-322-8228
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