- Saving money, improving your financial life, building wealth. It all starts when you set a goal and make a plan to reach that goal. So what is your goal? Set up an emergency cash fund? Get out of debt? Make a down payment on a car or home? Sock away money for college or retirement?
- Those with a savings plan are twice as likely to save successfully. Cash in those dusty jars of pennies. Pack your lunch instead of buying it at work. There are lots of little things you can do to fund your savings. Just be creative.
- Real stories from savers just like you.
- Savings tools, links, and more.
- Everyone, young and old alike, can benefit from making savings a habit, and Young America Saves can help! Savers who pledge to save create their own savings plan by setting a monthly savings goal, as little as $5, and then try to save that amount each month.
Building an emergency savings fund is one of the top goals of Military Savers.
Why Build an Emergency Fund
This is a sound choice. Having an emergency savings fund may be the most important difference between those who manage to stay afloat and those who are sinking financially. That’s because maintaining emergency savings of $500 to $1,000 allows you to easily meet unexpected financial challenges such as:
• repairing the brakes on your car;
• buying your child a new pair of needed shoes;
• replacing a broken window in your house;
• paying for a parking ticket; or
• flying to visit a sick parent.
The emergency fund not only allows you to cover these expenses, it also gives you the “peace of mind” that you can afford these types of financial emergencies. Not having an emergency savings fund is an important reason that many individuals borrow too much money at high interest rates. For example, with emergency savings, Americans most likely would not have to take out $2 billion a year in payday loans at interest rates that average 300 to 500 percent. If you are an active-duty military member there are restrictions for the use of payday lending in the Military lending Act. Click here for more information.
Where to Keep Emergency Savings
It’s usually best to keep emergency savings in a bank or credit union savings account. These types of accounts offer easier access to your money than certificates of deposit, U.S. Savings Bonds, or mutual funds.
But not too easy. Keeping your money in a savings account makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses. That’s why it is usually a mistake to keep your emergency fund in a checking account.
You may well need at least $100 to open the savings account and a $200 minimum balance to avoid monthly fees. On most military installations, however, the financial institutions on-base will offer lower minimums or no minimums. Also, during Military Saves Week (in February each year) many of the on-base military banks and credit unions will offer specialized savings products for Military Savers. For more information about who is participating in Military Saves Week click here. To join the Military Saver Community: Take the Military Saves Pledge.
How to Find Money to Save
There are many places to find money to save. Start with the loose change that many people accumulate. Americans typically save more than $100 in loose change each year. Use this change to open and grow a savings account. If you receive a tax refund or Earned Income Tax Credit, use a portion of this money to begin or increase savings. Since the Tax Credits average nearly $2,000, you may be able to open a savings account and still have plenty of money to pay off debts or cover other expenses. Click here for more ideas of where to find money to save.
Try to deposit money saved by cutting back on small, unnecessary expenditures. Click here for a list of more than 50 ideas for reducing spending. These ideas range from packing a lunch, to switching from daily lattes to daily coffees, to not using overdraft (which has high fees) or not bouncing checks.
Building an emergency fund may be easier if you involve your whole family in meeting this challenge. After you’ve explained the importance of emergency savings to your spouse or children, they may even help build the account. And, they will be more likely to understand why it’s more important for you to increase these savings than to pay for expensive gifts at birthdays or Christmas.
Another way to accumulate the $500 to $1,000 of emergency savings is to ask your bank or credit union to automatically transfer funds from checking to savings monthly or set up an allotment through myPay. Automatic savings is the easiest and most successful way to save. What you don’t ever see, you may never miss.
Having an emergency savings fund may be the most important difference between those who manage to stay afloat and those who are sinking financially.
For additional information, click here.
The best investment most borrowers can make is to pay off consumer debt with double-digit interest rates. For example, if you have a $3,000 credit card balance at 19.8%, and you pay the required minimum balance of 2% of the balance or $15, whichever is greater, it will take 39 years to pay off the loan. With accumulating interest, you will pay more than $10,000 in interest charges.
For additional information, see the National Foundation for Credit Counseling website at www.debtadvice.org.
These savings will provide funds for emergencies, future consumer purchases, home purchase, school tuition, or even retirement (also see Tip #4). You can use one (or more) of your six discretionary allotments to automatically transfer funds monthly from your into a savings account. Saving automatically is the easiest and most successful way to save. What you don't see, you will probably not miss.
The people of the Defense Finance and Accounting Service (DFAS) take pride in serving the men and women who defend America. We take our contributions to national defense seriously. We work hard to fulfill the important fiscal responsibilities entrusted to us by the American taxpayers.
For additional information, click here.
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. It was established by Congress in the Federal Employees' Retirement System Act of 1986 and offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.
A total of $10,000 may be deposited during each deployment and will earn 10% interest annually. You cannot close your account until you have left the combat zone, although your money will continue to draw interest for 90 days once you’ve returned home or to your permanent duty station.
For additional on the Savings Deposit Program, click here.
Roughly one in six Savers has selected paying off consumer debts as their wealth-building goal. That does not come as a surprise since, along with modest incomes, large consumer debts are the most important financial reason that people have trouble saving and building wealth.
The good news is that there is hope. With planning, discipline, patience, and maybe some outside help, almost anyone can reduce their debts and start to accumulate wealth.
Are you in trouble?
If you answer “yes” to any of the following questions, then you probably need to get your debts under better control:
1. Can you only afford to make minimum payments on your credit cards?
2. Do you worry about finding the money to make monthly car payments?
3. Do you borrow money to pay off old debts?
4. Have you used a home equity loan to refinance credit card debts, then run up new revolving balances on your cards?
Why too much debt is costly?
Borrowing more money than you can afford is costly in many ways. Americans spend well over $75 billion a year just on credit card interest and fees. That means that families who revolve credit card balances pay an average of $1,500 a year in interest and fees. If they saved that $1,500 in an account with a five percent yield, in 40 years they would have nearly $200,000! Taking on too much debt also lowers your credit score. That means you will end up paying higher interest rates on all your consumer and mortgage loans. A low credit score can also make it harder to rent an apartment, get utility services, and even get a job.
Too much debt isn’t just expensive. People with lots of debt often say they lack peace of mind. They worry constantly about paying off debts and making ends meet. The stress of these worries affects their family life, work performance, and other areas of their lives.
How to reduce your debts?
The first step in getting out of debt is to stop borrowing. To do that, you have to stop spending more than you earn. So, make a budget and cut out any expenses you can. It may help to cut up your credit cards or lock them away in a safe place.
While you are making a budget, figure out the most you can afford to pay each month to reduce your debts, then make those payments without fail. If you have debts on more than one credit card, either pay off the card with the highest interest rate first and work your way down to the card with the lowest rate, or pay off the smallest loan first and work your way up to the largest. Once you’ve paid off your debts, don’t give in to the temptation to start over-spending again. Instead, take the money you were paying each month on your debts and begin to save it. That will give you a financial cushion the next time an emergency strikes.
Where to get help?
If you are located at a military installation you can get assistance at the Family Readiness Center for free. Personal Financial Managers and Counselors are there to help and can be a great asset in getting a debt repayment plan in order. Another resource is MilitaryOneSource they also offer free financial counseling. Visit their website or call 1-800-342-9647 for more information.
In most communities, there are agencies that can help you manage your debts. The most helpful and most widely available are non-profit Consumer Credit Counseling Services (CCCS). CCCS counselors can work with you privately to help you develop a budget, figure out your options, and negotiate with creditors to repay your debts. Call 1-800-388-2227 to locate the office nearest you. There are also many Cooperative Extension offices in communities across the United States who offer workshops, home-study courses, and other services to help people manage their money, including their debts. Cooperative Extension offices are listed in the blue pages of the phone book under county government.
More Helpful Links:
- Military Saves collects information from members of the military who sign up voluntarily to participate in the savings program.
- The Military Saves site does collect first names, email addresses, phone numbers, installation location, installation name, branch of service, duty status, and rank/grade.
- Military Saves does not share personal information with anyone.
Use of U.S. Department of Defense (DoD) visual information does not imply or constitute DoD endorsement.