How to Get Financially Fit: Preparing for the What-Ifs
Andia Dinesen, AFC ®
Military Saves Coordinator
‘What if’ can be a strong combination of words. These two simple words can give many people a sense of panic when they start to think about factors they cannot control. Lay-offs happen, downsizing of the military will happen, pay freezes happen, reductions of pay may happen. Unfortunately, many of these types of ‘what ifs’ cannot be controlled by the individuals who are most affected by them. What can be controlled is how well-prepared one is for these ‘what ifs’.
Be Financially Fit. This is a term that the military likes to use. There are many different aspects of life that somebody can get fit for; usually getting fit takes a bit of training and discipline. The best way to get fit is to start with a plan and set some goals. This plan should include a spending plan, an emergency fund, a debt repayment plan (if needed), and retirement saving. These are the basic building blocks that every plan should include. Each person may have many other plans that they want to implement along with these, but this is a good start. Getting financially fit will most likely take some time, so it’s important to be patient. Setbacks may periodically occur, but you can reduce the severity of them if you have prepared for them.
Spending Plan. It can be difficult to make a plan without a map. Think of a spending plan as a map. It can be the best tool to figure out how much you are spending and savings. Click here for a great action plan for spending.
Emergency Fund. A good goal for an emergency fund is at least $500. However, if one of those ‘what ifs’ is becoming more of a reality start stashing cash. Cease discretionary spending on wants and start beefing up that emergency fund right away. No one is able to control all the ‘what ifs,’ but being prepared makes one much more comfortable.
Debt Repayment. A plan for paying down debt can be just as important as having a beefed-up emergency fund, especially when one is paying double-digit interest rates. Each payment made toward that high-cost debt is that much less interest being paid. By using a debt-repayment calculator, one can see how extra payments can add up fast and give more freedom as each debt is paid off.
Retirement Saving. The earlier the better is the key to retirement saving. It’s not necessary to save a ton at the beginning, it’s just important to get started. One’s age doesn’t matter: just start saving. While younger savers have an advantage because of compound interest, older savers typically have more money to sock away.
There are many ways to save for retirement. You can check some of those out here. Also, check out some of the blogs below.
Whatever the case may be, take these steps and put them into action. Begin to save, increase your savings, be prepared for the things you cannot control, the ‘what ifs’ of life. Take the Military Saves pledge today and take this first step to becoming a saver!
- Written by Super User
- Category: Blog
- Published: 21 February 2013