Members of America’s career military face a New Year of uncertainty as they question how sequestration might affect the United States Military in 2016.
Congress originally wrote Sequestration into legislation to motivate Congress to agree to a debt reduction plan. Although the military saw no sequestration cuts in 2015, the budget cuts could resume in 2016 since the original sequestration plan was meant to span a decade and reduce funding across all programs within the Defense Department by 9 percent.
Despite anxiety about sequestration, many middle-class military families still have a positive outlook on their financial situation. Positivity only does so much to keep you financially healthy, though. So, according to the First Command Financial Services Index, many military families have decided to continue to focus on their finances as their main New Year Resolutions.
Whether or not you’re worried about the effects of sequestration in the New Year, it’s a good idea to focus on your personal finances as part of your New Year resolutions. Staying on top of your money goals will help protect you from any negative effects felt from the top down.
If you want to have a financially healthy New Year, consider making these 7 financial goals part of your New Year resolutions.
1) Get out of Debt
Getting out of debt is the first step you have to take to reach financial security (and keep your career). With the threat of sequestration looming with continued cuts, it’s no surprise that 32 percent of America’s military families have listed getting out of debt as their number one New Year resolution for 2016, according to the First Command Financial Services Index.
If you want to have a financially healthy New Year, pay more than the minimum payment owed and get out from under your credit card debt or personal loan debt faster. Once you pay your debts off completely, you’ll have the freedom to decide where those extra hundreds or thousands of dollars will go each month.
2) Build a Budget
Trying to manage your finances without a budget is like flying blind. Having a personal budget built specifically around your unique income and spending needs will give you the clarity you need to help you reach your bigger financial goals faster.
Pull the records for your banks and cards from at least the past three months. Find the average amount spent for all of your different spending categories, including your housing payment, food, gas, utilities, entertainment, insurance costs, etc.
Building a budget will show you how much you need to spend versus how much you’re actually spending. Here are some budgeting tips to get you started.
3) Weed out the Unnecessary Spending
Once you have your budget, you’ll be able to use you it to weed out unnecessary spending. Look at your entertainment budget, for example. Did you spend more in the past three months than you though you did? It might be time to start restricting how much you spend on going out to eat or to the movies.
4) Improve Your Credit Score
Make it a goal in the New Year to improve your credit score. Make all payments on time, improve your debt to income ratio, and don’t let any bill go into collections. You’ll be surprised how much your credit score can improve in just one year. Be careful when getting your credit score online. Many websites want to charge you for something you can often get free from other sites. Here are some ways to get your credit score for free.
5) Start Saving (More) Money for Retirement
Do you have money stashed in your TSP account? Awesome! It’s a great retirement tool for military families. Unfortunately, it won’t be enough, though. You need to save more. Don’t bank on a 20-year pension either. What happens if you decide to get out at year 15? Saving your money along the way will do two things:
- It will keep your options open. You won’t feel obligated to stay in your position if you’re feeling miserable.
- It will give you even more money to rely on if you do decide to stay in until you qualify for a military retirement package.
So make it one of your New Year resolutions to start setting aside a portion of each paycheck into a Roth IRA or other savings account. You’ll be glad you did.
6) Get Unplugged
Do you ever feel like there aren’t enough hours in the day? How much time per day do you spend looking on Facebook, the internet in general, or in front of the television?
Do an experiment in the New Year, and take a week-long break from technology. See if you notice a difference throughout your day. How much more time did you have to spend with your family, reading, or catching up on hobbies or activities?
Once you find your biggest time thief, you’ll be able to take steps to managing your time more efficiently. You might even have time for a side job to bring in more money. It’s always a good idea to have an extra money-making skill to fall back on.
7) Start Earning Your Degree
If you’re enlisted and have always thought about earning your degree so that you might one day become an officer, get started in 2016 as one of you New Year resolutions. There’s no question that officers in the military make more than enlisted. Officers are also less likely to feel the effects of job cuts through sequestration. Use your GI Bill benefits, enroll in a reputable college, and get started on a brighter and financially better future.
Have a Happy, Financially Healthy New Year
No one knows what the New Year will bring, but you can do everything in your power to make sure 2016 is your best financial year to date by making your personal finances the center of your New Year resolutions. Build your budget, cut out unnecessary expenses, get out of debt, set money aside in savings and retirement accounts, and find time to do the things that you have meant to get started on. If you focus on your financial goals, you may just surprise yourself with how much you can accomplish in the New Year.