Nearly two-thirds of Americans say they are experiencing stress related to money, according to last year's American Psychological Association survey, "Stress in America." More than 80% were stressed about inflation, and of those experiencing money-related stress, more than half reported struggling to come up with the money to meet basic needs.
Many military families have heightened stress levels just from the uniformed lifestyle. Adding financial stress into the mix can be especially problematic. Fortunately, there's a blueprint to reduce some of this stress and to regain control of personal finances. But following it requires dedication, commitment and discipline.
1. Improve Cash-Flow Management
The journey toward financial security begins with a detailed budget and a commitment to staying on track. Of course, a budget is a plan for income and expenditures that allows you to live the financial golden rule: Spend less than you earn. All families, military or otherwise, should develop and commit to strictly following a budget.
2. Set Aside an Emergency Fund
An emergency fund represents the first line of defense against life's uncertainties. More than most, military families live in an environment of uncertainty: unplanned permanent change-of-station moves, deployments, the uncertainty of a spouse finding employment with each relocation and the certainty of eventual transition out of the military are but a few of the challenges they face. This puts a premium on jump-starting your emergency fund equivalent to at least 3-6 months of expenses. Everyone should focus on creating this cornerstone of a solid financial plan by setting up a savings account and automatically adding some amount to it from each paycheck.
3. Address Insurance
Even with a fully stocked emergency fund, some unexpected expenses are too big for families to absorb on their own. That's normally when insurance comes into play, helping to protect individuals, families and worldly possessions. A comprehensive protection plan that balances your financial abilities with your need for coverage is central to keeping the financial wheels on in good times and bad.
Tackling this issue could mean adding supplemental life insurance outside of what work or the military offers. It could mean ensuring that coverage for a non-wage-earning spouse is addressed and also conducting a broad-based needs assessment. When it comes to protecting property, adequate homeowners, renters and auto insurance are critical. Bad things happen to good people all the time. Insurance is often one of the best ways to make sure those bad things don't completely derail your finances. Military families need to sit down and assess all of their insurance needs.
4. Save More for Retirement
Building for the future is another key element of financial security. That means saving in some type of retirement account. One way you can alleviate uncertainty about the future is to start building retirement funds today.
5. Pull It Together with a Plan
Although not necessarily financial, estate planning is a key component of financial security. Preparing a will, designating a power of attorney, ensuring assets are appropriately titled and assigning beneficiaries helps ensure that if the unthinkable happens, financial stress will not be at the forefront of worries.
An up-to-date financial plan that ties together daily budgeting, short- and long-term savings, investments, insurance and estate planning can help reduce stress. After all, it's much easier to get where you're going if you know where you're headed.
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