Building a budget for your future

  • Published
  • By Airman 1st Class Michaela R. Slanchik
  • 509th Bomb Wing Public Affairs
WHITEMAN AIR FORCE BASE, Mo. --  The average American household has over $225,000 in debt, and two out of five do not have more than $500 in savings.

As we start off the new year, the certified financial counselors at the Airman and Family Readiness Center (A&FRC) at Whiteman Air Force Base, Mo., provide guidance to get out of debt and save for the future with just a few simple adjustments.

JoAnne Rodriguez, a 509th Force Support Squadron (FSS) work and life consultant, said having a spending plan and avoiding debt are the best ways to financially prepare for your future.

"The foundation to financial success is having a spending plan," said Rodriguez. "And sticking to it. The next important steps are focusing on debt reduction and investing wisely."

Some may view a budget as a restraint from living their life to the fullest, but in reality, a spending plan is a blueprint for where your money goes and a way to achieve financial goals, said Rodriguez.

A spending plan helps to not only budget for regular expenses such as gas and groceries, but also helps you to prepare for periodic expenses like oil changes or gifts for your loved ones.

When you don't follow your spending plan and choose to live beyond your means, you may depend on a credit card or other debt to suffice.

"Credit cards are a double-edged sword," said Rodriguez. "They can have positive effects on your credit report, some offer rewards points, but it's when they are not used responsibly that they can cause problems."

Rodriguez recommends only using a credit card for purchases that you can pay off by the end of the month in order to avoid paying interest fees.

Instead of depending on credit cards, an emergency fund stashed in a savings account should be used for unexpected expenses; such as taking emergency leave or paying an insurance deductible after a car accident.

For those who have accrued debt and may feel like they are in over their heads, Rodriguez suggests "power-paying" these debts off by making the largest payments they can afford to the loans with the highest interest rates first.

Once paying off debt is under control, it is easier to focus on investing more for the future.

Whether or not the government will have funding for social security benefits by the time the younger Airmen of today retire is something that no one knows and is not something on which to depend.

Joanne Rodriguez says that Airmen should be setting themselves up with other avenues for retirement.

"It's hard to say if there will be social security benefits in the years to come," said R.D. "Smitty" Smith, the director of the A&FRC. "It is crucial to have something to fall back on."

As the average life expectancy slowly increases into the low 80s and the average person works from ages 20-60, people need to save about 20 years' worth of living expenses before retirement.

Rodriguez suggests increasing investments with extra income such as from tax returns or after a promotion during your working years.

A Thrift Savings Plan (TSP) is offered to government employees, which Rodriguez and Smith strongly suggest considering sooner rather than later. It offers administrative fees less than 10 percent of what brokers charge. Your contribution to a TSP can be updated at any time and you can change the fund type. However, when choosing a fund Airmen should know that the higher risk investments generally produce the highest gains, said Rodriguez.

Those who invest at the age of 19 in a plan that averages a 10 percent return annually need to contribute $2,000 yearly for seven years to cash out more than $930,000 by the age of 65. However, those who wait until the age of 26 to begin investing will have to contribute $2,000 per year until they are 65 years old, and will only have $893,000 by that time.

For those seeking a short-term investment, options include a certificate of deposit or a money market savings.

The A&FRC offers free financial counseling, a budgeting workshop once a month and one-on-one sessions by appointment. In this appointment, a financial counselor will sit down with you to assess your personal financial readiness, help you create a spending plan, find debt reduction plans and an investment option that best fits your situation. The A&FRC can also provide guidance for home-buying, adoption and other large purchases.

If there is ever something that the consultants at the A&FRC are not able to assist with, they can refer you to the proper entity.

The goal of financial counselors at Whiteman's A&FRC is to educate and alleviate personal stressors, said Rodriguez.

To make an appointment today, contact Rodriguez at (660) 687-7132.