By Brittany Benassi, VP Financial Planning, Certified Financial Planner® at AAFMAA Wealth Management & Trust
In life, there are many scenarios where having a plan is important. For example, you wouldn’t go on a long vacation to a faraway destination without conducting some research and developing even a basic itinerary that you can follow. The same rules apply to financial planning, while every individual and family might have different needs depending on their lifestyle, a financial plan incorporates your unique factors and helps layout your financial journey.
Servicemembers are no exception to this rule, especially since these individuals have a tendency to go through many stages and transitions over the course of their careers. While some are common life milestones, such as getting married, buying a house and having children; others are unique to the military lifestyle, such as frequently relocating, deploying overseas and transitioning out of the service. Creating a financial plan that takes into account the unique aspects of military family life can help you make better decisions. Whether you are new to military life or are a seasoned Veteran or military spouse, here are a few steps to help you take control of your financial future with a strong plan.
Step one in the financial-planning process should always be a thorough assessment of your current financial situation. It’s hard to plan for the future and establish goals without understanding where you are now! Get familiar with your budget: What recurring expenses do you have (i.e., rent/mortgage, utility payments, grocery bills, etc.) and how does this match up to your take-home pay? It’s not unusual for expenses to vary on a month-to-month basis, but overall your spending should remain consistent.
Additionally, check on your savings. If you don’t have a “rainy day” or emergency fund that you frequently contribute to, it might be a good idea to start doing so. You never know when an unexpected expense (home/car repair, medical bill, etc.) might pop up. Once you know what you’re typically spending and saving each month, you can identify what additional funds might be available for investing and planning for your future.
Define your goals and anticipate your possible needs.
Everyone has hopes and dreams for their career and family, and some might be loftier than others. Take time to identify these goals. If you’re married, sit with your spouse and discuss what your personal, career and family goals are. Write it all down, even the big, long-term ones! Once you’ve identified some concrete targets, it’s easier to create a timeline and plan for achieving them based on your situation and budget.
At the same time, you also need to plan for unexpected or undesired events. While we never want these to happen, it’s important to think realistically about additional expenses that can pop up and how to plan for them. Think beyond the traditional emergency fund expenses mentioned earlier: Is there a history of chronic illness in your family that might require you or your spouse to enlist the help of long-term care? These services can be expensive, and you don’t want to be caught off-guard years down the road.
Similarly, what are your insurance needs? Most servicemembers have the military’s Servicemembers Group Life Insurance (SGLI) plan. That coverage maxes out at $400,000, so depending on your family’s specific situation, it may not be enough. If you are an AAFMAA Member, you probably have additional coverage to help fill the gaps, but it is important to reevaluate your needs at least annually and after any life event. Also, don’t forget to include coverage for your spouse and dependents in that evaluation. Coverage for spouses is a critical part of a sound financial plan, regardless of their employment status or income.
Lastly, take into account market activity and how it might impact any investments and savings you have. It’s smart to reach out to a financial planner who can help you determine the right amount of life insurance and the appropriate investment strategy for you and your family, and to review the potential risks involved.
Tap into your tools and resources
With clearly-defined goals and an understanding of your current finances, it’s easy to identify where you might need help to bridge the gap to complete financial readiness. This is where the financial planners at AAFMAA Wealth Management & Trust come in. Not only will we think of things you might not consider, we have a deep understanding of military career paths and the financial challenges that come along with them and are prepared to follow you on your career and life journey.
For some servicemembers, managing personal finances can seem scarier than deployments and relocations. However, if you take the time to assess your goals and familiarize yourself with the resources at your disposal, you’ll find that creating a solid financial plan isn’t as daunting as you think. We’re here to help! Let AAFMAA Wealth Management & Trust assess your current situation and support you on your way a secure financial future. Contact an expert Relationship Manager today by email at [email protected] or call us at 910-307-3500.