Guest Post By: Savannah Hennings
In a way, budgeting is like combat. You have to be prepared for inevitable expenses like food, clothing, shelter, education, utilities, transportation, etc. At the same time, you need to expect the unexpected, such as sudden medical emergencies or natural disasters. It’s no easy task to cope with these, especially not with the average military salary. But it can be done. While there’s no “one-size-fits-all” budgeting strategy that’ll suit every single military family, you can still benefit from these general tips:
A General Strategy for Budgeting Money…
1. Estimate How Much You Need to Save First
Most people calculate their savings as “income minus expenses.” In your case, however, you should calculate your expenses as “income minus savings.” These two might look the same at first glance, but there’s a subtle difference.
If you think of savings as “whatever’s left of the income after all the expenses,” it’s going to be extremely difficult to save anything. Without an idea of how much you need to stash for emergencies, it becomes easy to just spend whatever liquid cash is within reach, regardless of whether your bank balance goes down to — or even below — zero afterwards.
But if you think of savings as “a nest egg that you can grow month-by-month,” it becomes a goal you need to reach, rather than an afterthought. For example, if you earn a hypothetical after-tax amount of $1,000 per month, and you plan to save at least $100, that means you can’t let your expenses exceed $900. If they do, but you don’t want to touch your $100 savings, there are options like taking advantage of the likes of military discounts for insurance expenses or augmenting your income in some way.
2. Pay Off Your Interest-Bearing Debts
If you have any interest-bearing debts, like car loans or credit card bills, clear them out as soon as you can. Otherwise, the interest and penalties will compound over time, and paying for your day-to-day expenses will become the least of your worries.
If debt payments are eating up a significant portion of your income, you might want to consider drastic measures. For example, you can sell off that expensive loan-bearing car, and trade it for a cheaper, non-“lemon” model. This is probably easier said than done, since you’ve already invested a lot into the expensive car. But if it means taking a heavy load off your family’s finances, why not?
After deducting regular debt payments from the maximum expenses you can afford, you now have an amount to divide between basic needs and splurges. Obviously, you should prioritize the basic needs first.
Think about how you can cut back on basic expenses without sacrificing your quality of life. For example, you can cook meals at home, instead of ordering the more expensive fast food options. Perhaps you can ride a bike or take public transportation to your work location to save on gasoline. You can even switch to a service provider that offers cheaper data plans on phones. There’s no limit to the ways you can stretch your meager budget, as long as you’re willing to dig deep and exercise your ingenuity.
Once you account for debt payments and basic expenses, you should have something left over for “discretionary expenses” — which is finance-speak for “things you want,” like movie tickets, travel for recreational purposes, video games, etc.
Of course, you can’t eliminate these sorts of expenses completely. Life is hard enough as it is, so why make it harder by depriving yourself of the occasional indulgence? Set aside a portion of your income for discretionary expenses, but take care not to exceed that limit.
5. Take a Work-From-Home, Part-Time Job
It’s possible your income is not enough to cover for all the expenses above. It’s also possible that, even after cutting back some of your expenses, what’s left over still isn’t enough.
In this case, consider taking a part-time job. It doesn’t have to be “McDonald’s burger flipper,” by the way. Thanks to the Internet, it’s now possible to find jobs you can perform in the comfort of your own home — which means you don’t have to deal with stressful factors like the daily commute and office politics. For starters, check out these best places to find a job online.
A Few More Words…
This guide isn’t set in stone. Feel free to tweak it according to what works for you, or even disregard it altogether. Just as military strategies should be adjusted as needed, so should budgeting strategies be changed according to your needs.
She misses her military family every single day, even though she’s happy to live without the deployments. Connect with her on her blog or on Twitter: @SavHemmings.