What’s in Your Financial Toolbox?
In the military, the right tool can mean the difference between mission success and failure. The same goes for your finances. Whether you’re navigating a PCS, deployment, or planning for retirement, having the right financial tools can help you stay mission-ready at home. Don't fret though! In this 2-part series, we are going to get your ready with all of the right financial tools in your belt!
Here are some tools that can serve as the foundation for a strong financial toolbox—each one designed to build, repair, or improve your financial life:
- Budgeting and Expense-Tracking Tools: A detailed budget is your roadmap. Apps like EveryDollar, YNAB (You Need A Budget), or even a well-crafted spreadsheet can help you track income, control spending, and allocate funds for saving and investing. These tools help you plan spending and ensure you see where every dollar goes, allowing for adjustments that can reduce unnecessary expenses and enhance saving capacity. A balance sheet shows everything you own and what you owe, giving a snapshot of your financial strength.
- Emergency Savings Account: Think of this as your financial shock absorber. Establish an emergency fund, ideally between three to six months of living expenses, held in an easily accessible savings account. This cushion helps you navigate unforeseen expenses without derailing your long-term goals. Organizations, including Army Emergency Relief (AER), Navy-Marine Corps Relief Society (NMCRS), and Air Force Aid Society (AFAS), offer interest-free loans and grants to help with financial emergencies when your emergency fund does not meet your needs.
- Sinking Fund, or Future Purchase Savings: Saving for future purchases like holidays, birthdays, vacations, college expenses, your next car, or a down payment on a home can help you meet your financial goals without incurring additional debt. Estimate your purchase needs, determine the time frame, and save as you go along to meet that need or desire when the time comes. Annual expenses like Christmas should be planned, not treated as financial surprises.
- Credit Monitoring and Repair Tools: A healthy credit history impacts everything from loan rates to rental opportunities. You can obtain a free copy of your three credit reports from Experian, TransUnion, and Equifax weekly to help you monitor your credit history. Check your report periodically for errors and signs of fraud. Report any errors in writing to the credit bureau showing the error. Free tools such as Credit Karma or those offered by your bank can help you monitor your credit score and track changes. Credit repair does not require an outside entity to help you. You can improve your score yourself by reporting and disputing errors, making all payments on time, and utilizing only a small part of your available credit.
- Debt Elimination Plan: For those looking to reduce debt, tools like debt repayment calculators, apps using the debt snowball or avalanche methods, and financial counseling programs can be transformative. These resources help you assess your debt, prioritize repayments, and strategize for faster elimination of liabilities.
Get ready for the next installment!
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