By Claire Wood
Military families are no strangers to living differently than our civilian counterparts. We deal with frequent relocations, with people above our pay grade making life-altering decisions for us, and with deployments and separations. While this life of service can be incredibly rewarding, we also have our fair share of financial constraints as well.
Generally speaking, military families are very likely to be single-income families due to high rates of military spouse unemployment and the professional hurdles that come along with frequent relocation. Military families also incur significant expenses every time there is a permanent change of location.
Whether it’s rising housing costs and BAH rates that aren’t keeping pace or the expenses to make each new house liveable, PCS moves can end up costing you some of your own out-of-pocket expenses, unless you are being incredibly careful with planning and budgeting. Add in potential costs to travel great distances to see extended family members throughout the year, as well as the cost of setting up a new pattern of life at your next assignment, and the dollars can feel like they are just flying out the door.
There are some money-related factors that aren’t all bad. For example, most of us can rest assured that we will get a steady paycheck on the first and 15th of every month. Most of our healthcare is built in as an added benefit. For a full twenty-year service commitment, the military retirement plan isn’t so bad. And although it can take years to move up in rank, there are indeed opportunities for advancement in the cycle of a military career.
When it comes to money, often at the start of a new year we are all collectively doing our best to hit the reset button and return to or establish good habits, including getting a firmer grasp on our financial lives. This year, I thought it would be insightful to follow along my military family’s financial journey as we live out the year.
I have been married to my husband, Ryan, for exactly 20 years. We have three children 18, 16, and 14 and have just started our 11th year of active duty service. In 2022, we are anticipating some major financial milestones. Maybe you can relate. Each month, I will pull back the curtain just a bit to share some personal details of our lives as it relates to how we are making financial decisions in real time.
In 2022, we are expecting a PCS — our first where we will be geographically separated for the first few months. We will be weighing our options for housing in an incredibly tight and inflated housing market. This year, our term life insurance runs out and we will need to make some hard decisions about how to proceed and what levels of both coverage and risk we want to assume. We will be sending our oldest off to college this fall. We are also actively saving and looking to invest in a “forever” piece of property for post-Army life. Among all of those big-money moves, we also have high hopes to continue our retirement investing, to take at least one family vacation, to upgrade some furniture in our next home, and to continue giving generously to causes near and dear to our hearts.
As we enter into this year and our upcoming transition, I’m winding down my local job and making preparations to find gainful employment at our next stop. We never plan financially for my income, but try to live below our means on my husband’s salary. Anything I am able to earn allows us to accelerate our many financial goals.
I don’t know about you, but sometimes it feels like we are wizards or magicians trying to do all of the things life asks of us while maintaining a debt-free lifestyle. We budget meticulously. We say no to a lot of things so that we can say yes to what matters most. We have to keep an eye toward not just tomorrow or next month, but next year and ten years from now. We are getting a clear idea of what we want retirement life to look like and it takes years of backwards planning in order to make those dreams a reality.
So this is where we find ourselves and perhaps you are finding yourself here, too. It’s a new year and 2022 feels like an opportunity for a fresh start. In the spirit of all of us getting our proverbial ducks in a row, each month this year I’ll be sharing what big money events we have taking place, our research and processes for decision-making, and a challenge to you, dear reader, to take a good look at your own situation as well. So let’s get started.
January is the month for completing a cash flow analysis.
In its simplest terms, a cash flow analysis is simply performing a temperature check on your financial health. This is a formal or informal study of how your money is flowing through your household.
Plan a session to sit down with your partner and come with an open mind, no judgment, a calendar, and all of your financial documents. Set a designated amount of time, maybe half an hour to start, to get an overview of what money you have coming in and what is going out. Look at your entire year and make some notes about some of your biggest expenses.
Like us, do you have a PCS on the horizon? A big vacation you are planning for summer? Are you now in a position to start fully funding your ROTH IRA? What are some of your dreams for the future? What might you need to say no to now so that you can say yes later? Are there any places in your monthly budget where you can cut or tighten up expenses to make room for those big things coming later this year?
Now that you have a clearer picture of your cash flow, agree together with your spouse on some tangible checkpoints or goals you can write down and work toward. Make your plan and your progress visible in order to stay accountable and to gain traction from your small victories.
You just might find that this brief check-in together is enough to get you back on the same page financially, united in your dreams and goals for the future, and walking in step toward success.
Stay tuned for February where I’ll be sharing our process for analyzing our current life insurance needs and how they may be changing as our family is growing up and our assets have changed from the time we first began our original term.
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