Prepare for Military Life's Surprises...With Your Tax Return
By Alecia D. Blair, Military Saves Communications Associate
By now, you may know how you want to spend your tax return. Before you’ve spent the money in your mind, think about this. Military life poses many challenges that are very different from civilian life. These challenges can often be eased by having some money saved. With deployments and permanent change of station (PCS) moves, here are some wiser ways to spend your tax return in the New Year.
A “rainy day” fund isn’t just nice to have; it’s a must-have.
Reimbursement rates for temporary duty (TD) assignments have recently been cut, putting more responsibility on military families to plan ahead and budget. A solid “rainy day” or emergency savings fund is essential when you need cash up front. PCS orders can come at any time. Many expenses associated with these moves are not reimbursed until after the move, so having a strong emergency savings can help you be ready for the expensive unexpected.
Save automatically to your Thrift Savings Plan (TSP).
As a servicemember, you have the option of signing up for the government-sponsored Thrift Savings Plan. This retirement plan comes with some great tax benefits. The best part is that it’s yours to keep should you separate from service early or stay in until retirement. If you haven’t started your TSP or could add more to it this year, consider using your tax return for this purpose.
Evaluate your insurance.
Have you recently PCS’d? Moving to a new state and duty station might mean that you need to increase your auto insurance coverage. Has your family grown this year? It might be time to increase your life insurance and supplement your Servicemembers Group Life Insurance (SGLI) plan. Are you living off post? Do you have adequate renters or home owners insurance? Whatever life changes have occurred in 2014, the New Year is a wonderful time to evaluate your insurance needs, protect yourself and use your tax return to make some needed adjustments.
Plan Ahead for the 2015 holidays.
If you busted this year’s holiday budget or didn’t have one to begin with, consider using some of your tax refund to establish a savings fund for next year’s holiday season. Doing so will help you have the money up front for gifts, decorations, food, travel expenses and military balls or parties, rather than using debt-creating credit cards.
Spend a little on yourself.
Since you've thought strategically about using your tax return and your other obligations have been met, it’s okay to spend a little money on yourself. As a military servicemember or family, you’ve earned it. Take some time to talk about the purchase you’d like to make or the place you’d like to go. Discounts and deals are plentiful after the holiday season, so shop smart!
Whatever your strategy, make sure you plan to use your tax return wisely, keeping in mind the many surprises the military can throw your way. Be resilient. Set a goal. Make a plan. Save automatically.
- Written by Alecia Blair
- Category: Blog
- Published: 11 December 2014