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It’s that time of year again, and I don’t envy you. I’ve always dreaded moving.
My wife, however, feels differently. We rehashed it the other day, and she recalls that as a child in a military family, she embraced the opportunity for a new place to live, a new room, and an opportunity to start over without any baggage.
As we enter another PCS season, I’m going to adopt her positive perspective to tee up a very specific opportunity: This is your chance to overhaul your savings game. I picked up several of these ideas, or at least the terminology, at the America Saves Summit last fall. As you prepare to grind out another move, turn lemons into lemonade by stepping up your savings game.
Rise with the raise. This year’s 3.1% pay raise provides yet another opportunity to increase what you’re sliding into your savings account(s), contributing to the Thrift Savings Plan, or putting into an IRA or other investment. I’m fond of saying that the easiest money to save is the money you’re not already spending. Use all the many – time in service, aforementioned cost of employment, promotion, new employment – pay increases you see this year to save more.
Catch the spike. You could see an unexpected boost in your income by way of a tax return, an inheritance or even the return of your escrow account as the result of a home refinance. Whatever the reason for the windfall, use it to strengthen your savings plan.
Turn down the taxes. I mentioned a tax return as a common windfall. That can work to your advantage, but adjusting your withholding – modifying your W-4 on file with your employer – can increase your income paycheck to paycheck and allow you to increase allotments, contributions to the Thrift Savings Plan, or other employer plans throughout the year.
Save the first dollar. The decision-making process is a roadblock to a top-notch savings game. That’s why you hear “pay yourself first,” “make it automatic,” and other similar mantras from folks trying to encourage you to save. Put simply, if you save the first dollar instead of the last, you’ll be much more likely to get it done. Allotments through the military or split-to-save programs through civilian employers allow you to save above and beyond only retirement accounts. Take advantage.
Round it up. Some banks have automated programs that shift money from your checking to savings by rounding up each transaction or sliding certain categories of deposits into your savings, all without any action on your part. Explore these opportunities with your banking institution.
Pay off high-interest debt. Normally when I think about saving, I hone in on savings accounts, money market accounts, and any variety of retirement-oriented accounts. However, knocking out double-digit interest debt is another form of savings. If you’re burdened on this front, find a trusted partner to help develop a plan to save by eliminating this pesky enemy. The Military and Family Readiness Center is a great place to start.
Whether you’re PCSing or staying in place for another year, turn over a new leaf and boost your savings game.
Courtesy of USAA, By JJ Montanaro, CFP®
This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.
Investments/Insurance: Not a Deposit • Not FDIC Insured • Not Bank Issued, Guaranteed or Underwritten • May Lose Value
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER TM in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
USAA means United Services Automobile Association and its affiliates.
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