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Advanced Saving Strategies

By Ian Burgess, Command Financial Specialist
Source: http://www.militarysaves.org/

 

Saving money is easy.  There are only two ways to do it: spend less or make more, or a combination of the two.  Everybody has their favorite way to save including clipping coupons, limiting meals at restaurants, or perhaps riding a bike to work.  Here are a few methods that can help you super-charge your personal saving strategy.

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The first thing you should do is pay off your debt.  When you stop paying interest to banks and credit card companies, you'll have more cash to put in your savings account.  If a 60-month loan is the only way you can afford to buy a new car, then you're spending too much on the car and you're not putting enough into savings.  Same goes with credit cards.  Regardless of the balance or interest rate, paying only the minimum payment will take you forever to pay off.  The longer it takes to pay off a debt, the more money you are throwing away. 

Take advantage of your military benefits and discounts .  Morale, Welfare, and Recreation (MWR) and, Information, Tickets, and Travel Office (ITT) provide discounted recreational activities for the whole family.  You can find bowling alleys, movie theaters, and golf courses on most installations, all of which are half the price of the same thing out in town.  By shopping at the Commissary and Base Exchange, you can save even more (I like to use coupons on marked-down, damaged items).  And don't forget to ask for a military discount at every store and restaurant.  Even if they don't have an official policy, the sales person might just hook you up with a good deal.

Pay attention to how much money you're paying to the IRS.  My favorite legal tax scheme is to save all my tax-free money when on deployment, and then contribute everything to TSP when I'm home.  That means the IRS will get less of my money and I can save more for retirement at the same time.  I also save money by adding to my W-2 exemptions for every month I'm in a tax-free zone or for every month's worth of income I put in TSP.  Remember, per diem is tax-free too.

Save your raises.  One of the best parts about military pay is that we have fairly regular raises we can count on.  Don't use that fact to get ahead of yourself by racking up a bunch of debt with the intent to pay it off with the next raise.  Instead, the next time you get a raise, put it all towards your debt or savings.  You won't even notice a lifestyle difference until 20 years later when all those raises have turned into lots of money.  Some people call it paying yourself first.  I just like to call it a smart thing to do.

Once you've begun to save a bunch of money, you'll need to invest as much as you can in a tax sheltered account like an IRA or 401K.  Don't try to follow the Wall Street pundits who time market.  Some professional investors are able to beat the market some of the time but you don't have the time needed to time the market so don't try.  The only thing you can control is how much you invest and when you invest it.  You can make contributions monthly or yearly or whenever you want, the only thing that matters is that you get started ASAP.  The sooner you start, the more money you'll make in the future.  And don't let the current market fluctuations scare you because you take advantage of down months with double contributions.

So to become a saving superstar, pay off your debts as fast as possible, take advantage of your military benefits, save all your raises, and invest as much as possible in tax-deferred accounts ASAP.  Easy!  Right?

 

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