April is Military Saves Month.
"Make It Automatic" has long been a theme of the organization that encourages us all to take the pledge to "save money, reduce debt and build wealth over time." Automatic is an approach to saving that makes sense in theory and practice. It brings to life the concept of paying yourself first.
Think about it: If you wait until the end of the month -- using your leftovers -- or the pay period to save, invest or put some extra money toward your debts, there's a good chance there won't be anything remaining to do that good work. That "last dollar standing" strategy is doomed to fail. On the other hand, by using the first dollars you receive, instead of the last, paying down debt, saving and investing become priorities.
Here are three easy and powerful ways to make it automatic:
- Use the Thrift Savings Plan. When you sign up, your contributions will happen before your pay is deposited into your bank account, so it's one of the easiest ways to make it automatic. The TSP is a centerpiece of the Blended Retirement System. If you're eligible for the BRS, you'll need to contribute at least 5% of your pay to get the full 5% from your employer, Uncle Sam. Don't leave that free money on the table.
- Set up an allotment. This is another great way to set aside your first dollars instead of your last. Using myPay or your service's pay system, you can set up discretionary allotments from your mid- and end-of-month paychecks that will go to a savings account, mutual fund, IRA or a combination of the three. This can be a superb way to build your emergency fund, set aside money for a home down payment or supplement what you're saving for retirement in the TSP.
- Establish an automatic transfer from your checking account. With this approach, you wait until your pay hits your checking account, but by establishing an automatic transfer with your bank, you're still able to put your savings efforts on autopilot. You can set up your automatic transfers to happen twice per month to coincide with your paycheck's arrival and slide money into your savings or investment account.
Making it automatic is a simple, effective way to pursue your financial goals. Make those goals your priority and take the Military Saves Pledge today.
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