Financial planning: Why you need it

  • Published
  • By Tracie Faulk
  • 341st Force Support Squadron
MALMSTROM AIR FORCE BASE, Mont. --  Would you get in the car and drive hundreds or thousands of miles without knowing where you were going and with no destination in mind?

Many of us deal with our finances in the same, unplanned way -- believing financial planning is only for those who have extra money to put away. The truth is, financial planning is a map of spending and saving, regardless of income. It's an overview, or picture, of where you are now, where you're going and what you need to do to reach your financial goals (or survive an unexpected event such as a government shutdown). Understanding your financial picture helps you take control of your finances.

By taking control of your finances, you will know how much you need, when you need it, and how much you truly need to save.

With the recent threat of a government shutdown, many active-duty members and civilian employees were faced with the reality of not being paid for an unknown amount of time. Many were stressed, wondering how to make vehicle payments, mortgage payments or even pay for food.

What could people have done to possibly prepare?

Financial advisors recommend military personnel have at least three months of salary saved for emergencies. Civilians should have at least one year's salary saved. Although this may seem easier said than done, it is important to start saving -- even if it is just a little each month.

Learning a few helpful strategies can help you take control of your finances and determine ways to save for these unexpected events.

One strategy would be to develop a budget and stick with it. Know what your income is and keep track of your expenses. For the next month, every time you purchase something from a $3.50 latte to a tank of gas - write it down. Write down what you purchase, where you purchased it and how much you paid for it. At the end of the month, review your expense sheet and evaluate areas you might be able to cut back. Pay close attention to the variable expenses such as entertainment, fuel and groceries. Determine a reasonable amount to pay in these areas. Don't forget to evaluate the non-monthly expenses as well, such as vehicle registration, holidays and vacations. Make sure you incorporate non-monthly expenses into your budget.

What are your priorities? When creating a budget you must have financial goals. Setting financial goals will keep your budget on track. Saving for an emergency (such as unexpected loss of pay) might help keep you on track. Remember to be reasonable, live within your means and make it a priority to save a little each month.

Be financially responsible so if there is a government shutdown or if gas prices continue to rise, you won't have to stress. Seek assistance now at the Airman and Family Readiness Center. The community readiness consultants are ready to help with your financial planning needs. Call 731-4900 to schedule an appointment.