As we begin the new year, it's a perfect time to evaluate your finances and plan for the next 12 months. Whether you're a military service member, veteran or military family member, a key component of your financial stability will be growing your savings.
Below we have three tips to build up your savings, much like building a new house. Follow them, and before long you'll be in a position to have a prosperous New Year.
1. The Foundation: Set Up the Right Savings Account
First things first: You need to build a solid base for your savings, which means that your first goal should be setting up the right savings account. Look for these features as you're deciding on an account:
- No extra or hidden fees, i.e., monthly charges
- Easy access to ATMs that don't charge transaction fees
- Low minimum savings requirements (avoid those extra fees)
- An account that offers higher interest rates or dividends (which can also include no-fee checking)
- Mobile/digital access to your accounts through an app (making it easier to track your savings anytime, anywhere)
Another useful feature of a good savings account is the ability to automatically transfer specific amounts from another account to the account (for example, after a direct deposit or pay period), which adds to your savings.
2. The Frame: Budget for Everything
Once you have the foundation in place, you'll want to add the "frame" to your financial plan, which outlines what you're shooting for and enables you to be prepared for any contingencies. For your savings, create a budget that includes the following:
- Monthly expenses (i.e., food, mortgage, other family expenses)
- Other expenses that occur every so often (i.e., car maintenance)
- A fund for potential emergencies
Once you have these areas covered, add to your savings by setting some money aside each month. You'll be surprised how much your money can grow just by setting and sticking to a reasonable budget. Go here for more budget tips..
3. Raising the Roof: Put Your Money to Work
Once you have your savings basics taken care of, it's time to invest what you have wisely. Look into these opportunities to make more money off the money you have:
- Short-term returns: Invest in certificates of deposit, which guarantee you a specific return on your investment, based on keeping your money in the certificate for a specified period of time.
- Long-term investments: Look into NCUA-insured individual retirement accounts (IRAs), which are tax-efficient savings accounts built to support you when you retire. Also check out your civilian employer's 401k programs, which also help you save money on taxes while generating savings for retirement. Some employees will even match your contributions to 401k.
- Take advantage of the Thrift Savings Plan (TSP), the DoD's savings plan. Here's 10 reasons why you should sign up, and for more details on the program, see this Military.com overview.
Build Better Savings
Follow the steps above to build your savings from the ground up -- this will allow you to have more freedom in your finances, and continue adding to what you have. For more savings tips, visit Military.com's Personal Finance section.
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