Everyone should be financially literate, as the only way to navigate adult life effectively and avoid making mistakes with your money is through getting educated on this often overlooked topic.
This is particularly important for people in the military at the moment, or veterans who have returned to civilian life. To reinforce this point, stick with us as we look at some of the ways that financial literacy can benefit you and your family.
Why Financial Literacy is Essential for Military Personnel: Understanding the Basics
Getting to grips with the concepts and core tenets of budgeting, saving, and investing will let you make informed decisions about your finances, both today and in the future.
Better yet, having a good grasp of basic financial ideas and systems will help you manage your money more effectively over time.
Thankfully, the military provides numerous resources to aid in financial education and planning, including access to free financial counselors who can provide guidance on budgeting, debt management, and retirement planning. This is provided through the Office of Financial Readiness, and was actually written into law back in 2016 as a requirement for all personnel.
Additionally, there are many online courses available that teach basic principles of personal finance in an easy-to-understand format designed specifically for current or former members of the military. So whether you take advantage of state-sanctioned training, or go above and beyond with additional courses on your own dime, you’ll be set for a more stable financial reality going forward.
Appreciating Innovative & Sophisticated Financial Products
In order to take advantage of unique investment opportunities and make the most of your money, you need to have a handle on cutting edge financial products that are out there today.
Crucially, you need to do this in a way that doesn’t leave you overly reliant on your investments, but works within the limits of your budget.
For instance, you should consider whether it’s worth it to buy fractional shares or invest in low-cost index funds and ETFs which offer exposure to different markets while keeping your costs down.
Additionally, it’s important to ensure your portfolio is appropriately diversified across asset classes such as stocks, bonds and real estate investments.
You may also want to consider annuities as an option for additional retirement income since they provide steady payments over time and there is no risk of principal loss due to market fluctuations.
Lastly, if you are looking for growth potential with less volatility than the stock market offers then investing in alternative assets such as private placements may be an option worth exploring too.
How to Avoid Debt and Build Savings as a Military Member
Debt can be a major problem for military personnel, so it’s important to learn how to avoid it. One of the best ways is by creating a budget and sticking with it.
Make sure you are aware of all your expenses, including both fixed and variable costs, so that you can adjust spending accordingly.
Additionally, look for opportunities to save money wherever possible – from consolidating debt into lower-interest loans or refinancing high-cost debt products like credit cards.
Having an emergency fund set up is also essential in order to cover any unexpected expenses without having to go into more debt or dip into retirement funds unnecessarily. Aiming for at least six months’ worth of living expenses saved up will give you peace of mind should anything arise during your service term. Also make use of insurance to avoid major one-off costs.
Wrapping Up
Hopefully the importance of financial literacy is now clear, and you also know what steps you need to take to achieve it as a member of the military. Getting started at any point is better than burying your head in the sand where money is concerned.