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Many young adults may not realize the failure to save now could come back to haunt them when they're of retirement age, and realize they don't have enough money to retire comfortably. As an example to help Airmen avoid this dilemma, Military Saves Week is taking place throughout the Air Force from Feb. 20-27, 2011, to encourage Airmen to save money for their future. (U.S. Air Force Photo/Senior Airman Amanda Dick)
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Finances 101: A&FRC helps Airmen plan

Posted 2/16/2011   Updated 2/16/2011 Email story   Print story

    


by Senior Airman Amber R. Kelly-Herard
375th Air Mobility Wing Public Affairs


2/16/2011 - SCOTT AIR FORCE BASE, Ill.  -- As a young adult with a steady paycheck, it's easy to chalk retirement up to something that won't affect you for many years.

But many young adults don't realize that the failure to save now could come back to haunt them when they're of retirement age, and realize they don't have enough money to retire comfortably.

To help Scott Airmen avoid this dilemma, and as a part of Military Saves Week, the Airman and Family Readiness Center will host Crazy Cards at the Belleville Dorms Feb. 24 from 6-9 p.m. to help teach Airmen how to start saving for future wealth.

Crazy Cards is open to all Airmen, and especially focuses on those under the age of 25. Free food, games, prizes and credit score checks will all be available.

"Oftentimes, young people don't think about saving because retirement is so far away," said Lona Berndt, A&FRC Community Readiness consultant. "Really, now is the time to start because you have enough time to let your money compound."

To start better management of personal finances, the A&FRC recommends organizing finances by calculating debt, tracking expenses, figuring out where to cut back, creating a financial planning time line and implementing a spending plan.

Once a budget is established, saving should be a priority.

"Most people think they can't afford to save, but a little adds up," said Mrs. Berndt.
For example, the average person spends about $7 a day on lunch and snacks during the work week, which adds up to $35 a week, $140 a month and $1,680 a year. Much of that amount could be easily saved by bringing in lunch and snacks most days.

Allotments or direct-investments also make it easy. These allow users to have money taken directly out of their paycheck so they never see the money and can avoid the temptation of using it for other items. Plan to save a realistic amount and keep emergency cash at home.

Some may wonder what the difference between saving and investing is. Saving is used to meet short-term goals and for emergencies. Investing is money set aside for future income, benefit or profit to meet long-term goals.

An investment option that servicemembers should consider is the Thrift Savings Plan. Contributions are pre-tax dollars that are taxed at withdrawal or distribution at the current tax rate. Funds can be accessed penalty-free at age 591/2.

Another factor that plays into finances is credit cards. To avoid unwittingly burying yourself in credit card debt, users should always know their card's credit limit, APR/interest rate, payment due date, payment amount and options, and missed payment policy. Credit cards should not be used if you don't have the money to immediately pay it off, unless it's an emergency situation.

Signs of being in credit danger are juggling bills, charging necessities, taking loans for predictable bills, using one credit card to pay another and floating debit card transactions.

"To establish good credit, opt for a secure credit card, obtain a credit card from a local store, successfully manage a checking and savings account and pay bills on time," said Mrs. Berndt.

Another financial situation that most Airmen face is buying a car.

"Buying a car is a process, not an event," said Mrs. Berndt. "You have to think of what kind of vehicle you need versus what kind of vehicle you want and how both of those factors fit into your spending plan."

Research when buying a car is essential; this includes taking a test drive and checking all features, negotiating the price, reading all the paperwork and being willing to walk away from the purchase if your spending limit has been exceeded.

While leasing a car is an option, leases can have hidden caveats including: penalties for excessive mileage; good credit is needed; required maintenance; quoted lease payments may not include sales tax; return fees at the end of the lease; difficulty in early termination of the lease and payments may be higher than buying a car.

However, leasing may be a good option if the car will only be kept for two to three years, the car manufacturer is offering a lease special or an accountant advises to lease versus buy.

Anyone interested in more information on how to save should visit www.militarysaves.org.

For more information on finances or for any other A&FRC needs, call 256-8668.

The envelope trick

1. Budget each paycheck. Budget is a dirty word to most people, but budgeting should be done to the last dime to be successful with the envelope trick.

2. Divide and conquer. There may be budget items that cannot be included in the envelope system, but categories can be created such as food, gas, clothing and entertainment.

3. Filler up. After categorizing, fill each envelope with the money allotted for the budget. For example, $100 for clothing.

4. When it's gone, it's gone. Once all the money has been spent, that category is done. Trips to ATM should not be made for more money.

5. Don't be tempted. While debit cards can't directly lead to debt, if used carelessly, they can cause over spending. There's something psychological about spending cash that hurts more than swiping a piece of plastic.

6. Give it time. It will take a few months to perfect the envelope system.

Did you know...
- Airman's Attic has free household goods for E-6 families and below.
- The Exchange saves about 8.6 percent per purchase with tax-free shopping. 
- The Child Development Center saves $37-$118 per week based on family income. 
- The Commissary saves a family of four about $4,426 a year. 
- The Shoppette saves 20 percent due to tax free savings and overall average savings.
These are just a few examples, but there are plenty of savings around Scott.



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