The 2013 Military Saves campaign launches with Military Saves Week February 25-March 2. I may be a bit strange, or it could just be in my financial planner DNA, but I have to admit that each year I look forward to learning what the campaign's theme will be.
This year it's pretty straightforward: Set a Goal. Make a Plan. Save Automatically.
Those are words that could benefit you for years to come. To illustrate, I thought I'd take a "what if" look backward and explore the potential power of this campaign.
Military Saves, which is part of the nationwide America Saves campaign, has been around since 2003. That's 10 years. Let's see what a difference this year's theme could have made over the last decade.
- Save to pay down debt. Debt is a crisis in America. Government, student loan, credit card and even mortgage debt all represent an anchor around our collective necks as we move into the future. But a goal, a plan and an automatic approach can go a long way toward throwing off that anchor. Let's say you had $15,000 in credit card debt in '03 and chose to make only the minimum payments. Today, you'd still have more than $4,000 in credit card debt! Now, let's apply this year's theme. Had you set a goal of paying off the debt sooner by adding a mere $100 per month to your minimum payment (thus, your plan), your credit card debt would have been paid off a couple of years ago -- and you'd have saved almost $7,000 in interest! Make a plan to pay off your debt.
- Save for the unexpected. In the past 10 years, I can recall a broken water heater, my daughter's locked-up engine, and my Dad's declining health and eventual passing. All required cash outlays. With a mere $25 per paycheck set aside in a savings account beginning at the launch of Military Saves, I could have met all of these financial challenges and still had $1,500 sitting in savings. Save automatically into a savings account today.
- Save for retirement. Let's face it: If you work at it just a little, you can surely find a reason to put off starting to sock away money for retirement. But what if you had fought that urge back in '03 and decided to take advantage of the Thrift Savings Plan by setting aside $100/month? Believe it or not, you'd have a retirement stash today of more than $15,000 -- a good result without even bumping up your contribution each time there's a pay raise or promotion. That's making save automatically a powerful tool.
I'm sure there are plenty of folks who can look back at the past 10 years with a sense of pride and accomplishment over how they've handled their finances. Snatch your chance to do the same in the coming decade by setting a goal, making a plan and saving automatically.