By Hector Rojas, Spring 2017 Student Intern
Now that we have discussed what the Military Saves Pledge is all about and what types of goals Military Saves encourages service members to save for, in part four of this five part series, we will discuss how to save. Here are five saving strategies provided by Military Saves.
- Save for Emergencies
Consistent with our last post, this is the campaign’s number one focus. Having an emergency fund of anywhere between $500 to $1,000 dollars can come in handy when life gets hectic and it is the difference between those who manage to stay afloat and those who are sinking financially.
- Pay off High Cost Debt
As mentioned in part three of this series, debt is expensive. According to Military Saves, Americans spend well over $75 billion a year just on credit card interest and fees. That means that families who revolve credit card balances pay an average of $1,500 a year in interest and fees. If they saved that $1,500 in an account with a five percent yield, in 40 years they would have nearly $200,000! Therefore, the campaign says that the best investment most borrowers can make is to pay off consumer debt with double-digit interest rates.
- Save automatically using an allotment with myPay
According to Military Saves, saving automatically—through an allotment or automatic transfer of funds—to a short-term or long-term savings account is the best way to save. Why? Because you don’t have to think about it. Set it and forget it because it’s automatic! So, whether it comes to saving for your emergency fund, paying off a debt or investing in your retirement, set your savings on autopilot today and don’t worry about it tomorrow!
- Participate in the Thrift Savings Plan
If you are Active-Duty Military or a Department of Defense (DoD) civilian employee you have access to the Thrift Savings Plan (TSP). The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. It was established by Congress in the Federal Employees’ Retirement System Act of 1986 and offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.
- Deploying? Take advantage of the Savings Deposit Program
According to Defense Finance and Accounting Service (DFAS), the DoD Savings Deposit Program (SDP) was established to provide members of the uniformed services serving in designated combat zones the opportunity to build their financial savings. A total of $10,000 may be deposited during each deployment and will earn up to 10% interest annually. You cannot close your account until you have left the combat zone, although your money will continue to draw interest for 90 days once you’ve returned home or to your permanent duty station.
On the final part of this five part series, we will discuss some frequently asked questions about Military Saves and provide additional resources for you to learn more about the Military Saves Campaign so that you can be well equipped to take the pledge shall you choose to do so. Stay tuned.
To learn more about saving for an emergencies, click here.
To learn more about saving for debt, click here.
To learn more about how to save automatically, click here.
To learn more about Thrift Savings Plan (TSP), click here.
To learn more about the DoD Savings Deposit Program (SDP), click here.
For more savings strategies, click here, here, and here.