Protecting Your Financial Security

The members of Air Mobility Command (AMC) and the U.S. military are the best in the world when it comes to protecting national security. Unfortunately, their own financial security is often not as well served. Military families often have more debt than civilian families and fewer assets. According to the National Foundation for Credit Counseling and Pioneer Services, Veterans are twice as likely as civilians to carry credit card debt over several months and often become homeless due to escalating money issues. However, by using a few simple money-management strategies, Veterans and active duty service members alike can fortify their financial situation.

1. FIGURE OUT YOUR BUDGET

The first and most basic step toward building financial security is to figure out how much you can truly afford. Do not be afraid to look at your bank account, bills, debts, and paycheck to find out how much money you end up with at the end of each month. By taking stock of your finances, you will see exactly what your lifestyle costs and what you may need to adjust. This may seem like basic advice, but it is the foundation for financial security.

You will also need to make sure you are paying off any high-interest debt you might have from credit cards and loans. This debt needs to be resolved promptly, as it will grow over time due to interest, and it will demand more from your income. You might still have large debts such as student loans and mortgages, but these generally cannot be paid off in a short amount of time. Just be sure to make regular payments on these long-term debts, pay off high-interest debt as soon as possible, and avoid getting into new debt.

2. BUILD EMERGENCY SAVINGS

The next step is to set up an emergency savings fund. This account exists to be used as a last resort, such as if you lose your job and need money to survive without an income. A good plan is for your emergency savings to have enough funds to cover your living expenses for 3 to 6 months, which should give you enough time to get back on your feet. You can keep this in your bank’s savings account or even under your bed, as long as it is safe and readily available.

3. PREPARE FOR THE FUTURE

After putting away money for emergencies, you should keep saving for the long run. Most financial advisors recommend you save 15 to 20 percent of your income. You should not leave this money in the bank, as it will devalue over time due to inflation. Instead, you can put it in retirement savings options that will gradually grow, ensuring that you will have the money needed to retire or pay other large expenses. Here are some of the best options:

• Stocks and bonds
  The “Wall Street†style of saving. Stocks are essentially pieces of a company, which you can purchase and sell freely. If the company does well, you will gain money in the form of dividends from its stock. The stock’s value can also go up over time, meaning you can sell it for more than you purchased it for. Bonds are notes that are actually contracts made with a government or financial entity that guarantees a payout after a certain amount of time. These are much safer than stocks but have a lower potential payout.
• 401(k)
  Your company might offer access to a stock-and-bond-based retirement plan called a 401(k). Money you pay into your 401(k) comes from your pretax paycheck, and many companies will match your contribution up to a certain percent. It can be a great way to save money without getting into the confusing world of individual investing.
• Individual retirement account (IRA)
  • This is an investment account that your bank or other financial institution manages. You can add money to this account up to a certain amount each year (currently $6,000 for individuals below the age of 50 and $7,000 for those above), and there are two types of IRAs, each with different benefits.
  • Traditional IRA: Money added to this IRA comes from your pretax income. You still have to pay taxes on withdrawals, and you will have to pay a 10-percent penalty if you withdraw money from traditional IRAs before the age of 59.5.
  • Roth IRA: Money added to this comes from after-tax income, but you will not have to pay taxes on withdrawals. You can also withdraw money at any time without penalty, but you cannot take out earnings or interest before the age of 59.5 without paying a 10-percent fee.

4. KNOW WHEN TO SEEK HELP

Sometimes, just knowing how to budget and save is not enough to mount all of life’s financial hurdles. Debts can pile up, and your income may not be enough to cover all of your expenses. For those situations, Veterans and service members in need can find financial aid from various programs and organizations. Here are a few options available to them:

• The Servicemembers Civil Relief Act provides financial and legal protection for active duty service members.
• Nonprofit organizations like Operation First Response and The Coalition to Salute American Heroes provide financial assistance for Veterans and take into account individual needs such as utility shutoffs and foreclosures.
• The U.S. Department of Veterans Affairs offers financial hardship assistance if a Veteran cannot afford their health insurance payments.

CONCLUSION

With all of that out of the way, you should be set up for financial safety. The most important things to remember are to keep track of your budget, avoid debt, and start saving for the long term right now. By keeping these concepts in mind and knowing when to ask for assistance, you will be able to protect your financial security.

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The Servicemembers Civil Relief Act: https://www.militaryonesource.mil/financial-legal/personal-finance/servicemembers-civil-relief-act/

Operation First Response: https://www.operationfirstresponse.org/

The Coalition to Salute America’s Heroes: https://saluteheroes.org/get-help/

U.S. Department of Veterans Affairs financial hardship assistance: https://www.va.gov/
health-care/pay-copay-bill/financial-hardship/