As a member of the military, you are called to serve every day in challenging environments to secure the freedom and prosperity of our nation. To meet these challenges, you engage in “immediate actions” training to better prepare yourself to respond to all kinds of threats and situations. You may also face challenges in another environment—your personal finances. On a daily basis, you may encounter hurdles and threats to your financial freedom and future prosperity. The SEC and the Bureau of Consumer Financial Protection are joining forces to set out specific immediate actions that you can take while navigating your personal finances. These immediate actions will help you secure your financial freedom and ensure that you and your family prosper now and in the future.
Our websites, the SEC’s and the Bureau’s Consumerfinance.gov, provide tools and resources to assist you in preparing for the lifelong mission of financial success. Along with general savings and investing tips, both agencies provide detailed information aimed specifically at addressing the unique personal finance challenges of military personnel through the SEC’s and the Bureau’s Navigating the Military Financial Lifecycle webpage.
The immediate actions toward financial freedom include three basic steps: first, pay off high-interest debt; second, set goals and make a financial plan; and third, start saving and investing early.
Immediate action #1: ⬇ debt – pay off high-interest debt, ⬆ improve credit score
Before you invest in anything, it’s important to pay off any high-interest debt first. With the average interest rate on a credit card nearing , the money you’re paying on interest far outweighs the money you can normally make on most investments. Maintaining good credit and trying to improve your scores go hand in hand when managing your debt. Whether you’re renting an apartment or applying for a mortgage, your credit scores play a prominent role in your financial plan. Trouble with your personal finances can even put your duty status, potential promotions, and your military career in jeopardy. Learn more about how to maintain good credit scores.
Immediate action #2: ✔ set goals and make a plan
Saving and investing for the long term is the best way to achieve financial security. Start off with determining what you want to save for in life—an emergency fund, a vacation, a house, or college. Decide what’s most important and make a plan accordingly. You can use the SEC’s to see how much you need to save each month to meet your goals. It’s easy. Plug in your desired final savings goal, how much money you have readily available to invest, how long you plan to save, and a few assumptions. The calculator will show you how much money you need to contribute each month in order to reach that goal.
Immediate action #3: ✔ start saving and investing early
The fastest way to see your money grow is through compound interest, especially when you start early. The power of compound interest calculated on the initial amount of money you invest, and also on interest earned, can provide tremendous long-term benefits. For example, if you want to save $500,000 for retirement at age 65, by starting at age 25 and investing in a mutual fund averaging seven percent a year, you’d only have to contribute roughly $200 per month. If you get a later start and don’t begin saving until age 50, you’d have to save more than $1,500 per month, nearly eight times the amount, to reach the same total savings.
This article by was distributed by the Personal Finance Syndication Network.