For as many unknowns as exist with a military career, one thing is certain: there will always be stages of transition. PCS moves, military training or deployment, spousal unemployment, and childcare needs are just a few factors that impact a bottom line. By routinely evaluating your financial health, or the state of your money, servicemembers and families can plan for the (un)expected and adjust as needed.
Here are four tips for evaluating financial health — a practice that should be done several times a year.
1. Household budget
Kate Horrell, a Navy veteran spouse who has worked as a financial expert for 16 years, says a common mistake military families make is building a budget based on their situation at the current duty station, leading to issues when PCS season comes around.
“Maybe the spouse decides not to work, or housing is a lot more expensive, or childcare is impossible to find. Try your hardest to keep fixed expenses low so that you have flexibility when things change. This typically means avoiding debt and the associated monthly payments,” she said.
Horrell adds that in the case of two-income families, couples should try to live off one income and use the other for debt repayment, savings, or leisure.
“This will put you in a good position if the second income goes away,” she said.
2. Current debt
The standard rule for evaluating debt is no more than 36% of your income should go to debt. Step one for figuring this out is to know your numbers.
“First, find out where your money is going. Whether you use an app, a spreadsheet, or paper and pencil, track every cent for a few months,” Horrell said.
Horrell then suggests looking at two of the expenses she sees people waste the most on — car-related expenses and eating out. For example, before purchasing a new vehicle, a financial counselor can assist with determining the holistic costs, which include the loan or lease itself, insurance, registration, and…
Read the full article here
