With New Years just around the corner it’s a great time to set goals and re-evaluate your financial plan. Here are five financial moves military families should consider making right now.
- Take the 8% Challenge. This is a great way to increase your emergency fund and prepare for life’s eventual events. Simply save 8% of your pay each month in a savings account. At the end of the year you’ll have a month’s worth of take-home pay in the bank. After a three year assignment you’ll have a fully funded emergency fund.
- Open a ROTH IRA. If you don’t have a ROTH IRA account, take your annual pay increase and deposit that directly into the account. ROTH IRAs are not the same as ROTH TSP accounts. You have more flexibility and access to your money in the IRA version.
- Re-balance your TSP savings. If you have a TSP account, the beginning of a new year is a great time to examine your accounts and determine if your money is allocated properly. One easy way to re-balance is to invest in the lifestyle funds.
- Update your will. If your circumstances have changed significantly in the past year, like a marriage, divorce, new baby, or change in state of residence, it’s a great time to make an appointment with the legal office to update your will. While you’re at it, update your power of attorney too.
- Set a goal for your financial life. Make the goal specific and achievable. The best goals are based on factors completely under your control such as increasing savings as a percentage of your income, or reducing debts by a dollar value each month. After setting the goal, set up automatic withdrawals to put your financial life on what David Bach describes as “autopilot.”
If you have questions, please let us know. Good luck in the New Year!