Anyone who has served in the military understands the need for planning and discipline. Wouldn’t you know it, these two characteristics are just as vital when it comes to getting your finances in order.
Many people get frustrated or discouraged when they think about money matters. It’s easy to see why. In popular discussion and the media, it’s always tied up in Wall Street and the stock market. This all seems like a world for a small elitist group of people that you might not want anything to do with.
But that’s not reality. In the actual world, making money work for you and your family doesn’t need to have anything to do with any of that. It’s really all very simple and comes down to some easy math. So just by taking these three pieces of advice to heart, you can overhaul your finances and get on a path to a better future.
1. Plan Big Purchases in Advance
To take control of your money, you need to start planning. This starts with a budget. If you don’t already have one — and stick to it every month — that is step one. You’ll never get a handle on how you can make your finances work for you unless you have a good overview of the situation.
Then you need to prioritize big purchases and detail how you will pay for them. There may be emergencies, like car repair. But in normal times, you should be thinking six months out before pulling the trigger on things like new vehicle purchases, school tuition decisions, and changes to mortgage or rent payments. This even goes for items like computers, televisions, and vacations. Map out when and how much you can devote to certain things and start saving away money to pay for it all. That will keep you out of debt and on track for the long run.
2. Get the Right Card
Speaking of emergencies, one useful tool in your arsenal — when used properly — is a credit card. In addition to making it easy and secure to take advantage of online purchases and travel expenses, you will have a backstop available in case things really hit the fan. You shouldn’t use a card to pile up debt on day-to-day purchases, and especially not luxuries. Pay off that balance every month!
But it will always be there in case you get stranded on the side of the road, lose your bank cards while traveling, or need to book a plane ticket last minute in a crisis. Besides, companies like USAA help you rack up a ton of great credit card rewards, especially if you have an affiliation with the military. This way, you can take advantage and get great perks all while building up your credit with a perfect payment history over time.
3. Think Long Term
Once you have the immediate six months and emergencies planned for, you can start looking further ahead with more confidence. Naturally, home ownership, education, and healthcare will be the biggest considerations that most people deal with throughout their life. But you also need to think all the way ahead to retirement and finding some long-term growth for your money.
This is where the market and investments come into play. You don’t need to get too deep into that world. But a 401k or IRA is a no-brainer. Work to put some of your income — no matter how small — into these types of funds. The pre-tax benefits are enormous, and it will allow you to live with much less stress. Once you start to put even a little aside, you can rest assured that it will get much, much larger by the time you need it again.
If you’re not sure what the difference is between an IRA and a 401k, SoFi has great educational resources you can learn from.
Planning for Financial Success
It’s hard to stay above water these days. Even the most disciplined can slip up or catch a bad break. The difference between success and failure, however, often comes down to proper planning.
Make sure you map out any big — and even medium-sized — purchases and expenses. Get the right credit card so you can take advantage of rewards while improving your credit. And think long-term so that you will be ready for retirement.
This alone may not guarantee success. But you will be on the proper path and can know you will be the one in control of your own future from now on.