The following, written by L. Lee Acker, a financial professional from the Bethesda (Md.) Fleet & Family Support Center, is part of a continuing series of financial blogs aimed at helping you achieve a healthier financial status… good goal for all of us, right?
* In my last post, I talked about IRS Scams during tax season. We’re entering the high point for tax returns and the jerks who like to take your money are still out there doing what they do, so please be careful.
I finished last time by mentioning my Jelly Bean Jar Coin-Savings effort (Oh, that reminds me… any suggestions on how I can keep my wife’s hands out of my jar? Please, post them in the comments section).
That was an obvious set up for today’s post on saving. February 19th marked the beginning of Military Saves Week http://www.militarysaves.org , which runs through February 26th. What is Military Saves?
“Military Saves is a national campaign to persuade, motivate, and encourage military families to save money every month, and to convince leaders and organizations to be aggressive in promoting automatic savings.”
Military Saves is part of the broader America Saves www.americasaves.org Campaign.
“This year, America Saves Week is encouraging everyone to ‘Set a Goal, Make a Plan, Save Automatically.'”
So as you can see this is a big deal and I’m going to challenge you to take the pledge http://www.militarysaves.org/take-the-pledge : “I will help myself by saving money, reducing debt, and building wealth over time. I will help my family and my country by encouraging other Americans to Build Wealth, Not Debt.”
I must confess that even as a Financial Counselor I’m a little intimidated about encouraging you to save. Why? I’ve had my own spending and savings struggles in the past. When I was younger, my concept of money was “Got some? Spend it!”
I took that attitude into my military career. I had a weakness for sweets (well, truth be told, I still do) and an unquenchable love of music. Snicker Bars, Sprite soda and $60 spending sprees at the music store were par for the course for me. When you add up what I was spending on a monthly basis, it came out to about $140 just on those few items! That’s $1,680 a year!
Ouch! I still wince just thinking about it today.
To make matters worse, all that spending was being done on my credit cards. I took out a personal loan to get control of my credit card debt. However, quickly I found myself in twice as much debt. I never cancelled the credit cards or cut my spending habits.
It wasn’t until I was called into my Commanders Office and asked “Why am I receiving calls about late payments?” that I finally woke up. What an embarrassment! I started taking action. But it took me a while to work my way out of that hole and then to start a systematic (and automatic) savings program. I’m just now making real progress on my retirement savings.
Unfortunately for many people, their “candies and soda” are new cars, designer clothes, trips, jewelry or other things they can’t really afford.
What about you? What are you doing to save? How are you saving specifically? Do you have an action plan?
In preparation for writing this post, I went to the Merriam-Webster Dictionary http://www.merriam-webster.com/dictionary/saving for a definition of saving. Interesting entry, “the excess of income over consumption expenditures.”
You know savings is more than just the nickels and pennies in my Jelly Bean jar. Saving can be not spending more on something than it is worth or getting a good deal. But more tangibly saving is setting something aside for a goal later on down the road, like for retirement, a home, college, or simply to see it grow from $10 in the savings account to $1 million in investments and real estate (What? You haven’t thought about being a millionaire? There are some great books to help you with that.) The moral of the story on saving is simple:
– Spend less than you make
– Set aside something for a rainy day and for the future.
– Watch it grow over time
Now that’s a nice thought and sounds easier than the reality of day-to-day life, so let me give you three practical tools you can use to put legs to your intentions:
1. If you are just getting started with saving, take a look at the SaveandInvest.org, Savings Basics page http://www.saveandinvest.org/FinancialBasics/Saving to get yourself oriented to the concept of what and how to save.
Here’s a compelling story on the Military Saves website of a couple who took the pledge and moved mountains to financial freedom. Click HERE for the real-world success story.
America Saves has one too: http://www.americasaves.org/blog/349-tales-from-a-first-year-saver.
2. Here’s a savings calculator you can use right now to determine if you are on track to reach a savings goal or how long it will take you to reach a goal http://apps.finra.org/Calcs/2/Savings
There are also many calculators for different situations, like how much to save for a house, college, a trip, etc. A quick search online (try “savings calculator”) will give you many options, though make sure the site is from a reputable one that isn’t just trying to get your business.
3. If retirement is on your radar, then ChooseToSave.org has a great tool called the Ballpark Estimator http://www.choosetosave.org/ballpark/ to get you started down the road to planning for retirement. The interactive version allows you to input your assumptions about inflation, investment return and even has a link to get an estimate of your expected social security benefit.
These are great tools to get you in the mindset of how to save. Also, don’t forget you have Financial Counselors who can help you with these steps.
The bottom line is that you need to do the “one foot in front of the other” to make savings happen. What is the “baby step” you need to take to save a little something for later? Let me close by helping you with that step. Take out a piece of paper and write down the next physical thing you need to do to put a plan in action to save money. Whatever that one action step is, that one baby step, write it down, tear off that piece of paper and GO DO IT!
‘Set a Goal, Make a Plan, Save Automatically’ and share with me how you are saving in the comments section.
P.S. Next time I’m going to put on my HazMat suit and talk about the murky world of debt collection. I’ll share tips on how you can successfully wade through and get free of debt problems.