Filed under: Finances
It’s tax season, and finances are on your mind. Financial planning is important and it might help you stay on track with your fitness goals. What motivates you to exercise? Maybe it’s your New Year’s resolution, or you’re training for an upcoming event. The key is finding what works for you, so that you maintain a regular exercise routine.
For many, money can be a strong motivator for maintaining their exercise behaviors. You pay for gym memberships, fitness classes, and fancy exercise equipment—but is spending money a good way to stay motivated?
In general, people often are motivated by immediate gratification (versus being rewarded later) and by losses, rather than gains. Some research suggests that the idea of losing money is a strong motivator for maintaining an exercise program. So, if you pay for a gym membership and never use it, that sense of monetary loss can motivate you to actually go to the gym. Still, the value you place on that membership is important too. You might not feel a significant sense of loss over a $10 monthly gym membership, whereas the threat of losing $200 a month for a different membership might matter more. In one study, money was deducted from some participants’ prepaid accounts each time a fitness goal (walking 7000 steps/day) wasn’t met. Those who “lost” money experienced a greater increase in activity compared to those who were paid each day they met the same goal. For some people, losses feel worse than gains feel good.
You also might consider pre-paid or unlimited-visit gym memberships, where you pay a certain amount up front. And the more often you go, you get more bang for your buck as each class becomes cheaper.
Sometimes you need to “trick yourself” into good behaviors. Are you motivated by losses or gains? Find a trick that works for your wallet and you might find yourself in better shape for it!
Making smart financial decisions now—such as saving your money so that it earns compound interest—can secure your future. You might find yourself with extra money to spend during different points in your career. Perhaps you worked overtime hours or received hazard duty pay. These extra funds can feel like a windfall and that there are endless possibilities for what you can purchase. While that might seem attractive in the short term, investing your earnings with compound interest can literally “pay off.”
You earn interest—money the bank pays you—from saving or investing a set amount. For example, if you save $100 in a savings account with a 5% annual interest rate, you’d have $105 at the end of the first year: your original $100 plus $5 in interest. Compound interest is what you earn on the money you save and on the interest that money earned. Using the same example, you’d have $110.25 at the end of the second year: $105 plus $5.25 in “compounded” interest.
The more you save, the bigger your interest compounds. And when you come into a large sum of money, perhaps from deployment pay, you have a unique opportunity to make that money grow. Check out how much you could earn by using a compound interest calculator. Visit your bank’s website or meet with a financial counselor to learn about other opportunities to earn compound interest and how to invest in stocks and bonds too.
Keep your eyes on long-term financial goals and stay financially fit by creating and sticking to a budget. Refrain from buying “extra” things in the short term too. And set aside money—up to 6 months of living expenses—in a “rainy day” savings account to help cover emergencies, costly car repairs, and other unexpected expenses.
Moving in with your significant other is a big step in your relationship—and that often means combining finances. Take some time to explore your comfort level in the relationship and decide what’s best for you.
Sometimes couples have a hard time talking about money, especially if you approach finances differently. What if you’re thrifty, but your partner lives paycheck to paycheck? Or your significant other made some smart investments over the years, while school or job changes kept you from doing the same? Here are some tips to start the “money talk.” Read on...
Financial stresses are real and affect many service members. Sometimes stress can explode into bigger problems if you use drugs or alcohol as a means to cope or if you take out your frustrations on your spouse. How you perceive your stressor has a big impact on how stressful your situation feels. You can always choose how to react.
For instance, as you get your tax information together, you might realize you won’t be able to afford that new car or move into that new apartment, after all. You might think, “I’m a failure,” or “My spouse screwed up.” Such thoughts place blame on yourself or your spouse and stir up feelings of shame and/or anger. If you let these feelings drive your behaviors, you could make matters worse. Not dealing with your shame well enough could lead to negative coping behaviors such as using drugs or alcohol. Not effectively managing your anger might lead to ugly arguments with your spouse.
Rather than playing the blame game, it might be more constructive to think, “We didn’t save enough this year, but we’ll make some adjustments and still meet our long-term goals.” Yes, you’ll feel disappointed, but you’ll also feel optimistic and ready to make those much-needed changes.
To learn more on how to take charge of your thoughts, or accept them and let them pass, check out HPRC’s tips on positive thinking. And use the Mind-Body ABCs Worksheet to help increase your awareness, plan better outcomes, and improve your performance—financial and otherwise! Also, Military OneSource offers financial management services to help you plan a budget, do your taxes, and more.
Money issues tend to be a major source of stress for Americans, and military families are no exception. Financial stress can increase your risk for poor health and have a negative impact on productivity and mood. Stress over money can reverberate through your relationships too. For example, couples who are under financial stress are more likely to be hostile and aggressive with each other and less secure and happy in their relationships. So what can you do to reduce your stress over money?
Here are some tips from Building Resilience in the Military Family:
- Have each family member discuss his/her financial dreams, how to make money decisions, and who will manage the money. (If there are differences, try the tips on HPRC’s “Making Decisions” card)
- Save at least $1,000 for unexpected expenses and, ideally, six months of your total monthly expenses.
- Work on paying off debt. Figure out a plan to pay off your debts, no matter how long it will take to get rid of them.
- Create and use a budget. This planning tool from Military OneSource can help you make a financial management plan.
- Save for retirement. A good rule is to save 10–15% of your gross income in retirement accounts annually.
- Check your credit. Knowing your credit history and credit number can help you spot identity theft and/or motivate you to stay (or become) responsible.
- Create a will. Setting up a will is important no matter your age.
Think about whether you have the insurance your family needs. Do you have health insurance, auto insurance, home/renters insurance, and life insurance?
A lot of money-saving challenges have been sprouting up all over the web. These savings challenges may seem like one-size-fits-all easy-savings plans, but can they really help Warfighters save money?
As for most for financial questions, the answer is “it depends.” For some, using one of these challenges can be a fun, easy way to set aside additional savings, but for others it could be a futile attempt ending in frustration. Problems arise when the lofty savings goals touted by such plans just don’t fit your lifestyle.
So what then? Should you give up and do nothing? No! Have a savings goal, but make sure it’s one tailored to your own financial abilities. Start with an understanding of what you can save, and be realistic about your savings goals and how they can fit into your life. If $200 a month is too much, then don’t aim to save $2400 by the end of the year.
If you decide you can save $1400 a year, that averages out to be $26.50 per week, or about the cost of two pizzas. Maybe you can save more some weeks than others. If so, then just keep track of what you’ve saved. As long as you average about $115 per month, you can reach your goal of $1400 by the end of the year. If you start to see that your goal was too ambitious, don’t be afraid to adjust it instead of being disappointed at the end of the year or, worse, giving up.
For more information, visit Military OneSource’s “How to Save” web page.
Check your money assumptions
Continuing our series on this week’s tip is to check your money assumptions. Finances can be strained during the holidays. This is not just an emotional problem, but how you think about money can affect you emotionally. Do you find yourself thinking, “I must give my family as good a Christmas as I had as a kid” or “I should be able to buy my kids whatever they want”? The fact is, you may like things to be different, but must or should they? Get rid of words such as “must” or “should” and focus instead on thoughts such as “What can I afford?” and “Are there ways I can make the holidays special without spending a lot of money?” Then notice how you feel without the constraints of what you must or should do. Instead, give yourself permission to give your family the holiday you can afford this year.
Identity theft is a serious crime that can completely disrupt your life through credit card charges and ruined credit history if the theft is not caught quickly. So, what is identity theft? It’s what happens when someone assumes your identity by using your personal information or property—typically your Social Security number or credit cards—without your permission. According to the Bureau of Justice Statistics, there are three general types of incidents:
- Unauthorized use or attempted use of existing credit cards
- Unauthorized use or attempted use of checking accounts
- Unauthorized use or attempted use of personal information to get credit cards, accounts, or loans or to commit other crimes
Homes unoccupied for extended periods may be goldmines for thieves to dig through trashcans, dumpsters, or storage areas at homes or apartment buildings for documents with useful pieces of information. Or it may be as easy as stealing a credit card from your mailbox or directly from your wallet.
When getting ready for deployments, you can place an active duty alert on your credit reports that lasts for one calendar year. For more information and tips, review the Federal Trade Commission (FTC) handout for Warfighters and their families.
Pre-deployment can mean a number of things to a Warfighter, from intense training or drills to saying farewell to family and friends. Preparation for deployment can be over months or at a moment’s notice with little or no time to settle your affairs. It’s important to have a checklist and contact list ready to use prior to your departure so you’re ready, whatever the scenario.
Having your personal finances in order should be a high priority. Options for being ready might include contacting a financial advisor, setting up automatic deposits and withdrawals, creating a monthly budget, checking into over-withdrawal options, adding a close friend or family member to your account to act in your absence, and reviewing your financial information and account numbers with a responsible person. Once all your financial ducks are in a row, your finances will be easy to maintain.
Your checklist should also include items such as legal documents, personal property review, auto and home insurance and maintenance, medical information, and international phone coverage.
One of the top personal sources of stress for Warfighters (according to a 2011 DoD survey) is money. Not enough money, not enough savings, or a bad credit history—all contribute to financial stress. For information and ideas on budgeting and saving money, check out this recent HPRC article. Another tool in your financial arsenal is the credit report. But first: What is a credit report?
A credit report is simply a record of your credit history. It includes your name, social security number, home address, credit cards, loans, collections, open amounts (how much you owe), and whether you have paid your bills on time (if late, it shows how late: 31-45 days past due, 46-60 days past due, etc.). In fact, you have more than one credit report; there are three major ones, so you need to pay attention to them all.
It’s important to have good credit reports—they have the information businesses look at to determine if they want to do business with you. This means if you apply for a credit card or loan, (1) are you worthy to get credit; (2) if you qualify, then what would the interest rate be; and (3) for an interest-free credit card or loan, what would the payback period be.
A number of businesses look at your credit reports: credit card companies, banks, mortgage lenders, cell phone companies, and even your insurance company. Employers can look at your credit history as well, but they must ask for your permission first.
It’s important to look at your credit reports for accuracy, especially with identity thefts, and to review the list of open credits that you may no longer use. Open credit is open credit—it can limit you in the long run because creditors know you have open lines of credit to use. The great news is that you can ask for a free credit report every 12 months from each of the three major companies, thanks to the Fair Credit Reporting Act (FCRA). Visit the Federal Trade Commission’s (FTC) website to see how to get your free credit reports.