Making Dollars and Sense Out of Financial Planning

We’re only in the second month of 2024, but by now the majority of us have abandoned those earnestly made New Year’s resolutions. Tellingly, an October 2023 Forbes Health/One Poll survey of 1,000 U.S. adults found that just 8 percent of respondents tend to stick with their goals for a month. One resolution that is worth all the willpower, though, is to get your personal finances in order and create a realistic budget that is lean enough that it won’t break the bank but not so stringent that it breaks your resolve.

A daunting task, yes, but military Families can simplify it by taking advantage of the Army’s Financial Readiness Program (FRP), which offers free services from credentialed financial counselors and resources such as the Financial Readiness Tip Sheet. As Robyn Mroszczyk, AFC®, Financial Education program manager, Directorate of Prevention, Resilience and Readiness, explains: “Personal financial managers and counselors provide educational and counseling programs on topics such as understanding budget and debt management, the Thrift Savings Plan, setting financial goals and developing strategies to achieve those goals. Classroom training and individual counseling sessions provide participants with the knowledge and skills needed to develop individual strategies to achieve financial goals and maintain their financial well-being.”

Rather than being a mammoth undertaking, financial planning can be handled in a relatively short time if you figure out your goals and work from there. Mroszczyk points to the value of setting SMART goals (those that are specific, measurable, attainable, realistic and timely), as these will help you stay focused and ensure that you use your time and resources wisely. And whether you are trying to save $1,000 or $20,000, you need a clear financial picture before you know how many dollars you have to put away. Essential to that picture is a spending plan, or budget, Mroszczyk says. Creating one is as straightforward as figuring out your money goals (say, saving for a car, repainting your living room or adding to a retirement account), calculating your total income, listing your expenses, deducting your expenses from your net income to get a balance and then regularly updating your plan.

“Spending plans help Soldiers and Families gain control of how they spend their money by mapping their expenses—both fixed and variable—against their income. The key is to find a plan that works for you and giving yourself grace when unexpected expenses come up,” Mroszczyk explains. The FRP offers this simple spending plan worksheet.

This exercise is a great way to determine if you are overspending on indulgences or nice-to-haves (like that monthly $200-plus cable package plus subscriptions to streaming services). But keep in mind that while creating a spending plan you should have a family conversation about everyone’s needs and wants so that no one is forced to make compromises that are impossible to live with.

“By understanding where their money is going, Soldiers and Families can work to reduce their expenses, if necessary, and ensure they’re spending and saving in a way that aligns with their goals,” Mroszczyk says. One tool to help start the conversation is the Financial Values work sheet.

Taking charge of your financial situation can be tough at the beginning of the year, especially if you’re still in a financial holiday hangover. This kind of stress causes some people to panic and make choices that they later regret with monetary 20/20 hindsight. Mroszczyk warns against making snap decisions and seeking quick fixes when staring down major debt. One example she cites is taking out a payday loan to get cash right away. “These loans,” she says, “can put you into greater debt. They charge high interest rates and require quick repayment. This can lead to costly upfront and hidden fees. You may have to take out additional loans or roll over a current loan to cover the previous balance. This can lead to a debt cycle.”

One solution to get back on track, Mroszczyk says, is to speak with lenders about extending their term or cutting their interest rate so you can have lower monthly payments until you can catch up. She also suggests prioritizing your credit bills by paying off those with the highest interest first (while still making minimum payments on the rest of your accounts) and saving enough so that you have an emergency fund of three to six months or, if that’s not possible, at least $1,000.

“Without an established emergency fund, credit cards and payday loans are two of the most costly options for dealing with unexpected expenses,” she notes. “Even if you’re able to regularly make your monthly minimum payments, interest rates can keep your debts from decreasing significantly. You may get caught in a cycle of continuing to struggle to save, and unforeseen costs will continue to come up.”

With all the crises Soldiers confront in a world of constant conflicts, they shouldn’t have the added burden of figuring out alone how to combat debt creep. The good news is they don’t have to, since military members and their Families are eligible for free financial counseling from the government. Find a credentialed counselor in your area by visiting https://finred.usalearning. gov/pfcMap.

If you are in financial distress, you may be eligible for an interest-free loan or grant through Army Emergency Relief. To find out if you and your Family are eligible, go to https://www. armyemergencyrelief.org/.