Frugal living is coming back into style, and military families are leading this trend. In fact, the latest findings from the First Command Financial Behaviors Index reveal military families with household incomes of at least $50,000 are putting more dollars toward savings and reducing debt compared to other middle-class consumers. During the first quarter of this year military families on average:
- Put 6 percent more per month into their retirement accounts and short- and long-term savings than other middle-class Americans.
- Dedicated 9 percent more per month to debt-reduction payments than the general population.
These impressive results show that military households responded to the recent economic turmoil by taking control of their personal finances. Their continued focus on fiscal responsibility is a model for the nation at large.
So how strong are your financial habits? Do you make saving money and cutting debt a priority? Or does money slip through your fingers in spite of all your good intentions? First Command Financial Services offers a few helpful tips for managing your money.
Tip No.1: Establish specific goals for things you really want. Saving as a matter of principle just doesn't provide the necessary motivation for most people. You must have definite goals -- things you really wish to have.
Tip No.2: Set definite deadlines for reaching your goals. Be realistic about how much will be required to reach your goals. How soon will you need it?
Tip No.3: Pay yourself first -- fundamental to every financial plan. When you make out the checks to pay the bills, don't put yourself last. You may never get there. Make that first check out to yourself.
Tip No.4: Get your money out of sight and out of mind. Automatic savings tools -- such as bank drafts and the Thrift Savings Plan -- are an excellent means to this end.
Tip No.5: Establish specific accounts for each separate goal. If you have two or more basic objectives, establish two or more accounts to achieve them.
Tip No.6: Stick with your plan. The best plan in the world is useless if it's not activated or if it's abandoned. If your goals are meaningful to you, you must stick with your original plan.
Tip No.7: Hire a financial coach. Military families who use a financial planner contribute more to their savings and investment accounts. Planners serve the role of a coach, encouraging and inspiring their clients to embrace positive financial behaviors and stick with their long-term plans. During the first quarter, military families, with the help of a financial planner, contribute:
- $2,721 to overall savings, compared to $2,256 for military families who don't use a certified financial planner.
- $1,301 to long-term debt payments, compared to $1,113 for military families who don't use a CFP.
Military families without a financial plan are twice as likely to feel financially stretched than those with a plan. By saving more and cutting debt, people feel less stressed and more optimistic about their financial future.