Kickstart Your Financial Success

I don’t know about you, but I just love the beginning of a new year. This is a chance for a fresh start on managing your family’s finances, and striving to reach financial success. There are many tools and resources available, but trying to manage your money can be intimidating, especially if you don’t know where to start.

I recommend writing down your family’s financial goals. Your goals can be as simple as paying off a credit card, or putting a specific amount of money into your savings account. I’ve found the following tips for achieving financial success invaluable.

Checking Your Credit Report Regularly – I’m sure you are familiar with the many commercials or services that offer credit monitoring services. The good news is there are many ways to check your credit scores for free. Many financial institutions offer a monthly update of your FICO score at no charge. You can also request a credit report from the official source, AnnualCreditReport.com one time per year for FREE! 

Once you retrieve your credit report, you should review it thoroughly. Ensure your payment history and account balances are accurate. You should also review your personal information, including addresses (which as a military family can be changed often). Any item that is unfamiliar to you could potentially be an error, or warning sign of identity theft. Errors within your report can be disputed and potentially deleted. Having loans and high credit card balances could ultimately affect your credit, along with other financial factors.

Build an Emergency Fund – The advantage of having an emergency fund is that you don’t have to take out loans, or rely on credit cards, when unexpected expenses arise.  Start by determining what works for your family, remember everyone is different so don’t get frustrated trying to keep up with others. You could start with a goal of saving $500 for emergencies. These are things like unexpected auto repairs, property damages, or medical bills. Over time, you can increase your emergency fund as your budget allows.  The next goal would be $1,000 and the long-term goal would be 3-6 months of expenses saved in your emergency fund.

Create Sinking Funds – Once you have your emergency fund at the current level, then start building sinking funds. Sinking funds are for upcoming/planned items where you build your funds throughout the year to be ready when those payments are needed to be paid. Your annual vehicle registration and holiday gifts are NOT emergencies!  You know that items like these are coming up, so you need to plan accordingly.  If you know you will be spending $240 for the holidays, you can make a HOLIDAY SINKING FUND and put $20 per month into that account.  Same for your vehicle registration.  Let’s say it is $150 per year, so you will put in $12.50 per month into that sinking fund.  Sinking funds can be cash in envelopes, individual accounts in a bank or credit union, or virtually managed with financial programs.

Pay Off Your Debt – The beginning of the year is the best time to sit down and complete a thorough review of your debt. Write everything down and make a plan to eliminate as much as you can. There are strategies like the snowball or avalanche method that could help.

The snowball method focuses on paying off the smallest of all your debts as quickly as possible. Once that obligation is paid, add the money you were putting toward that payment to the payment of the next smallest debt owed. This continues until all accounts are paid off.

The avalanche method focuses on paying the loan with the highest interest rate first. By focusing on the loans that are the most expensive to carry in the long run, you should pay less over time.

If you aren’t sure which method would be best for you, then I would suggest checking our PowerPay.org.  This has been suggested to us throughout our military career.  It is a free resource and it is great to “play around” with the numbers to see what may work best in your scenario.

Tackling debt can be tricky and may take a lot of time, but finding a plan that works for you will be worth it in the end. Just remember to check your credit regularly, build an emergency fund, create sinking funds, and pay off any debt you can. This will put you in control of kick-starting your financial success.

So, are you ready to find financial freedom this year? Be sure to take advantage of the resources available to you like personal financial counseling, online savings calculators, and remember you can also reach out to your installation’s Readiness Center, as they may offer classes that can be helpful.

Find Out More with MyMilitarySavings.com!