Having a financial strategy in place helps you meet your needs and pay for any unexpected expenses with money left over to put toward your short and long-term goals.
Living within your means ensures your future financial security, including retirement.
Consider not your long-term plans, like paying down a mortgage, saving for a family vacation and contributing enough to your TSP or 401(k) each year to earn matching contributions.
Having an all-encompassing picture of the current state of your financial accounts and an idea of what you want to spend money on in the future can keep you from overspending, while still allowing for “fun money” or one-off expenses.
Review your finances at least once a year (or whenever something that affects your income or expenses occurs) to make sure that you have enough money to live comfortably now and in the future.
Here’s a financial review checklist to get you started:
Do a Recurring Payments Audit
Subscription services are everywhere: streaming services, but meal kits, gym memberships, clothing deliveries, and more.
Look at your bank account and credit card statements and evaluate your recurring payments. Do your subscriptions enhance your day-to-day life? Is each one something that you need?
You may be able to save more toward your goals by giving up a subscription service or cooking dinners at home.
Review Your Budget
If you do not maintain a budget, it’s easy to lose track of where all your income goes each month.
Take some time each year to audit your bank account and credit card statements. Add up all of the money you have coming in and then look at how much is going out.
Some of your monthly payments will be for things you need, like your mortgage or rent, groceries or a car payment.
Others will be for things that you want, like new clothes, restaurant meals or travel. Once you have an idea of your monthly fixed and mandatory expenses, you can determine what’s necessary, what you can cut and how much you can reallocate toward other goals.
Pay It Forward
As much as you need income now, you may need it more in retirement when you are no longer working. Even if you’ll receive a pension, it’s important to supplement your retirement income with regular contributions to an IRA, TSP, or a 401(k) while you are still working. In 2022, you can contribute up to $6,000 to an IRA (or a Roth IRA if your income is within certain limits) and up to $20,500 to a TSP or 401(k). Employer-sponsored TSP and 401k accounts may include matching contributions. Matching contributions provide free money that can grow while you are still working and boost your income in retirement.
Use Insurance to Protect Your Family
Insurance protects your family’s financial stability so that sickness, car accidents and home disasters don’t liquidate your savings.
If you were to die today, would your family still have enough funds to meet their goals?
Life insurance protects your family from having to feel the financial burden of a loved one’s death.
It is a promise you make now to protect your loved ones in the future. While insurance products cost money, they can provide financial security if your family needs to file a claim.
Your current income and expenses – and how they change over time – determine your future. So, you should know how your money is allocated when you’re planning.
Written By: themilitarywallet.com
