Written by Krystel Spell
Being prepared for the unexpected is vital for military individuals and their families. By having an emergency savings fund, you create a financial safety net that brings peace of mind. It not only protects you during tough times, but also allows you to navigate the challenges and expenses that come with relocating to a new duty station and seize exciting opportunities without financial stress .
Here are some tips to build a strong emergency savings fund that empowers and helps to safeguard your future.
Start by setting clear financial goals. Determine how much you can afford to contribute each month, and commit to consistent saving, while also recognizing that there is flexibility to adjust if needed. Aim to build an emergency fund that has at least $500. A disciplined approach to saving will ensure you reach your goal faster and provide a solid financial cushion for you and your loved ones. Use our spending and savings plan to help you determine how much you can save.
Automate Your Savings
Setting up automatic savings with varying income can be a challenge, especially when dealing with fluctuating paychecks. Fortunately, automatic saving apps offer a convenient solution. These apps allow you to create rules that automatically save a certain dollar amount or percentage of your deposit as long as it exceeds a specific threshold.
For instance, if you receive one paycheck of $300 and another of $2,000, you might need the entire $300 for bills but could save a portion of the $2,000. With the app, you can set up a rule like "save 5% of any deposit over $1,800," and it will automatically transfer the designated amount into your savings. This way, you only save from your largest paycheck, and you don't need to worry about saving from smaller deposits.
The best part is that these apps are customizable, allowing you to adjust the percentages and deposit amounts to align with your saving goals. This flexibility ensures that you can adapt your saving strategy as needed. Additionally, during slow months or when you don't receive larger paychecks, the app won't transfer anything to savings, giving you financial peace of mind.
Another option is to take advantage of military-specific financial programs, such as the Savings Deposit Program (SDP), which offers service members deployed to eligible combat zones an opportunity to save up to $10,000 at an impressive interest rate. You can also allot a deposit of as little as $5. Automating your savings ensures a portion of your income goes directly into your emergency fund without temptation to spend it elsewhere.
Avoid Lifestyle Creep
As you receive promotions or pay raises, consider the benefits of avoiding lifestyle creep. By continuing to live within your means and redirecting the extra funds into your emergency savings account, you can proactively enhance your financial preparedness.
Embracing New Opportunities
Life is full of wonderful opportunities that may require upfront financial commitments. Whether it's traveling to a new place, experiencing an adventure sport, or attending a once-in-a-lifetime event, having a robust emergency fund can make these experiences attainable without derailing your long-term financial goals.
Don't forget that you can start with small contributions to your emergency fund and gradually increase them as you become more comfortable. What matters most is that you're taking the initiative to save. Every little step you take adds up and brings you closer to a stronger and brighter financial future. So, no matter how small your starting point may be, know that it's a significant step in the right direction.
Are you trying to save money? Let Military Saves help you reach your saving and debt reduction goals. We'll keep you motivated with information, advice, tips, and reminders to help you reach your saving goal. Think of us as your own personal support system.
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