September 30, 2016, by Anum Yoon – You’re 18, 19, or 20 and just joined the military. Now what? Your CO will tell you how to do just about everything else in your military career, but when it comes to your personal finances, as long as you are financially responsible, the less they know the happier they are. Eventually you might have to attend a class on retirement planning, but right now, retirement is so far away on the horizon you can’t even see it with the Hubble telescope.
Believe it or not, this is the perfect time for you to start planning for your future and setting financial goals. Sooner or later, you are going to get a non-government-issue family and you will need to figure out how to support them on your enlisted salary. Living in the barracks is great when you are single, but once you are married you will need to find a place to live. Your basic housing allowance (BHA) will pay for a small first apartment, but unless your new spouse likes sleeping on the floor you are probably going to need to do some serious shopping.
Start With Tracking Your Spending Now
While you are living on-base or on-post, your housing expenses are covered. But you may decide to live off base, or may have to if there is not enough space available. BHA will pay a set amount each month, but that is based on your rank, not your rent. If you choose to rent over that amount, you will need to come up with the rest, and pay utilities. Depending on where your first assignment is you might choose to purchase a home, and in addition to paying a mortgage, you will also need to be able to pay for homeowners insurance and property taxes.
Knowing how you spend your money now is a good place to start when you want to know how much to save. For one month, track your spending in detail especially if you are already living off base. Even count that cup of coffee you grab on the way to work every morning. If you have any money left at the end of that month, put it in a savings account then sit down to crunch the numbers and see how you can save even more.
Deciding Where You Can Save More
If you are living off base already, look first at your utilities and see where you can cut back. It can be with simple measures like turning lights off in rooms you aren’t using, or adjusting your thermostat so that it heats or cools more when you are home. If you can, install a programmable thermostat to help moderate the temperature automatically. Also be sure to check and change the filter in your HVAC unit on a regular basis so that it isn’t working harder to force air through a dirty filter. Mark a calendar to do it monthly.
Setting Long Term Goals
While retirement might not be anywhere on your horizon just yet, it is something worth thinking about because there are opportunities that the military offers to help you reach those goals, namely educational opportunities in the form of the G.I. Bill. Whether you want to get a college degree, or learn a new trade, or just advance your military career, there are opportunities for the asking. At the same time, consider making a military career one of your long term goals. Where else can you retire in your late 30’s or early 40’s and start another career while getting a steady paycheck from a previous job?
While deployments are not always the best part of the military, travel opportunities can be. The Navy’s motto might once have been to “see the world,” but not many other careers offer all expenses paid trips. Using those travel opportunities to learn new languages and experience other cultures are things that you can one day add to your resume when looking for a civilian job, or add to your portfolio when starting your own business.
No matter where you are in your military career, the opportunities ahead of you are endless. Starting to save now for the future is just the beginning.
About the Author: Anum Yoon is a personal finance writer based in Philly. She runs a personal finance blog called Current on Currency. Follow her on Twitter @anumyoon.
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