Dear NMFA: How do I budget?

We know military life can be confusing at times, but NMFA is on your side. You ask the question, and we will find you some answers.  

Dear NMFA— Could you do an article on budgeting basics and tips? I know a lot of lower enlisted can benefit from it, and so can anyone who isn’t familiar with finances.
—Kimberly S. 

Dear Kimberly,

At NMFA, we can attest that budgeting and financial hoops have always been a top concern of military families. It’s a priority for us, too, so we want to make sure you have access to resources for all kinds of budget scenarios—retirement planning, preparing for a PCS, and staying informed on pay allowances. It can be overwhelming, so we’re sharing a few basic tips to help:

Budget Basics

Sometimes baby steps are the way to go when having family budget talks. It may not be the most exciting—or even pleasant—topic to tackle, but it can be made easier by sticking to basic budgeting principles:

• Spending Plan: This is your month-to-month list of expenses. Your out-of-pocket necessities, car note, and insurance would all go into this principal bucket. The Federal Trade Commission has a budget worksheet with fillable fields for a quick and easy personalized tracker. Using the worksheet or one similar will keep the budget plan manageable.
• Emergency Fund: Military families know this bucket more so than most. Car repairs, housing issues, PCS loss, medical devices not covered by insurance—all this can come at the worst of times. Having some cash flow ready to go in this principal bucket is a must that you’ll thank yourself later for having. Experts recommend families have an emergency fund of $1,000 before making any extra payments on debts.
• Savings and Debt Repayment: This may be the most challenging bucket to tackle. Savings and debt payoffs are essential to address in your family budget. Some experts say paying extra on higher interest debts is the best plan, and others recommend paying the smallest debt off quickly to gain a sense of accomplishment and momentum.

Military OneSource

Military OneSource keeps an up-to-date financial resource hub, including free financial classes and one-to-one counselors. This is a great starting point to see exactly what your family is qualified for, such as emergency relief funds and grants. Each military branch installation has a relief society, and many offer more personalized help by hosting coffee and budget chats with financial counselors—making the experience family friendly.

Let the Resources Work for You

Using resources catered to military families can be the most helpful step in basic budgeting. Emergency loans, scholarships, child care relief, and Department of Defense sponsored programs exist to make the unique military life just a tad less complicated. Just be sure to do your research to avoid military-focused consumer credit scams.

Lastly, remember to celebrate the small wins! Track your progress on paying down debt or hitting those purchase goals. It’ll all serve as a reminder that you set up a plan and successfully executed it.

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