Investment doesn’t have to be a scary or foreign word to the military family. Instead, it can be exciting! Since many of the 1.3 million service members serving this country tend to be younger and therefore have a somewhat limited income to invest, there are some things every military family should consider.
The 2019 Blue Star Families survey found that leading stressor for 49% of military spouses and 44% of service members was financial issues. Although when many people hear or see the word “invest,” they think of wall street and the loud screaming of stock trading – it doesn’t have to be that.
Build a budget
Sit down as a family and figure out exactly what your monthly income and responsibilities. There are many free templates on the internet to help you organize it. This means outlining housing, utilities, cell phone bill, TV/internet, food, debt and “extra” money. When you do this, it is also an opportunity to look at things that you can eliminate to better serve your family’s financial health. It may hurt a little to get rid of that gym membership or extra channel that you probably don’t really need, but it will help you in the long run.
Once you’ve got your budget for the month outlined and know exactly to the penny what you have to begin investing, dive in.
Invest in debt first
One of the most important steps a military family can take is to actually invest in the debt that they already have. With so many military families feeling the strain of budgeting due to being more junior within their service or the inability of the spouse to work, starting with your debt can actually be the best investment you can make.
Start with any credit cards you may have. Have you looked into the Servicemembers Civil Relief Act? You may be eligible to reduce your interest rates down to 6%. Call your lender and ask for their SCRA representative and begin that process if you haven’t already. This also can apply to any car loans you may have as well. Once you’ve figured out what is “extra” in your budget, you can utilize part of that to pay off your credit cards, followed by other debts you may have. Since credit cards tend to have the highest interest rates, it’s usually best and easiest to start there. The more you send to principal each much, the quicker it will be paid off. It may sting a little in the beginning to not have as much “fun” money, but it’ll be worth it in the end.
Thrift savings plan
This is a simple and smart way to invest in your family’s future. Many more seasoned service members have been heard saying they wished they had started theirs sooner. This is mainly because it’s so simple and relatively low risk. The money is taken from the service member’s paycheck automatically and invested in the funds they decide on. Do some research on the options available and pick something that is right for your family.
Ready to do more?
Once a military family has eliminated much of their debt and is saving for their future, they may be financially ready to do more. This may mean investing in IRA’s, college savings plans for children or even real estate, but the important thing to remember is to ensure the family can absorb the risk or loss. If the family has a secure budget, savings and overall financial health – they may be ready to do more. Seek the advice of financial experts to review your financials to assist you in weighing your options, but be wary of those who attempt to sell you things rather than help you focus on financial health.
In the end, investment doesn’t have to be a dirty or scary word. Think if it as pouring into yourself, in happiness and in your family’s financial future. Sometimes investment mean giving things you enjoy in the short term to reach an end goal that will be long term. Although it may be uncomfortable in the beginning, making the decision to invest will be one of the best decisions you make in the end.