Military Saves Week -- Helping Airmen 'save' for their future

Published Feb. 16, 2011
By Senior Airman Amber R. Kelly-Herard
375th Air Mobility Wing Public Affairs

SCOTT AIR FORCE BASE, Ill. -- As a young adult with a steady paycheck, it's easy to chalk retirement up to something that won't affect you for many years.

But many young adults may not realize that the failure to save now could come back to haunt them when they're of retirement age, and realize they don't have enough money to retire comfortably. As an example to help Airmen avoid this dilemma, and as a part of Military Saves Week Feb. 20-27, the Scott AFB Airman and Family Readiness Center is offering events to encourage Airmen to save money.

"Oftentimes, young people don't think about saving because retirement is so far away," said Ms. Lona Berndt, A&FRC community readiness consultant. "Really, now is the time to start because you have enough time to let your money compound."

To start better management of personal finances, the Scott AFB A&FRC recommends organizing finances by calculating debt, tracking expenses, figuring out where to cut back, creating a financial planning time line and implementing a spending plan.

Once a budget is established, saving should be a priority.

"Most people think they can't afford to save, but a little adds up," said Mrs. Berndt.

For example, the average person spends about $7 a day on lunch and snacks during the work week, which adds up to $35 a week, $140 a month and $1,680 a year. Much of that amount could be easily saved by bringing in lunch and snacks most days.

Allotments or direct-investments also make it easy. These allow users to have money taken directly out of their paycheck so they never see the money and can avoid the temptation of using it for other items. Plan to save a realistic amount and keep emergency cash at home.

Some may wonder what the difference between saving and investing is. Saving is used to meet short-term goals and for emergencies. Investing is money set aside for future income, benefit or profit to meet long-term goals.

An investment option that servicemembers should consider is the Thrift Savings Plan. Contributions are pre-tax dollars that are taxed at withdrawal or distribution at the current tax rate. Funds can be accessed penalty-free at age 591/2.

Another factor that plays into finances is credit cards. To avoid unwittingly burying yourself in credit card debt, users should always know their card's credit limit, APR/interest rate, payment due date, payment amount and options, and missed payment policy. Credit cards should not be used if you don't have the money to immediately pay it off, unless it's an emergency situation.

Signs of being in credit danger are juggling bills, charging necessities, taking loans for predictable bills, using one credit card to pay another and floating debit card transactions.

"To establish good credit, opt for a secure credit card, obtain a credit card from a local store, successfully manage a checking and savings account and pay bills on time," said Mrs. Berndt.

Another financial situation that most Airmen face is buying a car.

"Buying a car is a process, not an event," said Mrs. Berndt. "You have to think of what kind of vehicle you need versus what kind of vehicle you want and how both of those factors fit into your spending plan."

Research when buying a car is essential; this includes taking a test drive and checking all features, negotiating the price, reading all the paperwork and being willing to walk away from the purchase if your spending limit has been exceeded.

While leasing a car is an option, leases can have hidden caveats including: penalties for excessive mileage; good credit is needed; required maintenance; quoted lease payments may not include sales tax; return fees at the end of the lease; difficulty in early termination of the lease and payments may be higher than buying a car.

However, leasing may be a good option if the car will only be kept for two to three years, the car manufacturer is offering a lease special or an accountant advises to lease versus buy.

Anyone interested in more information on how to save should visit their base base's Airman and Family Readiness Center or go on-line to www.militarysaves.org.