6 answers
Brock
Student
Oceanside, California
1
Question
Asked
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How should I spend/save my money as an 18-year-old in the US military?
I'm almost a year in the service and I still don't have a credit card or a vehicle.
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6 answers
Patrick Meyer
Executive - Data Analytics and AI
725
Answers
Naperville, Illinois
Updated
Patrick’s Answer
Brock, it's important to understand that as an 18-year-old serving in the US military, your financial choices can have a major impact on your future. The first thing you should focus on is setting up a sturdy emergency fund to handle any unexpected costs, aiming to save at least three to six months' worth of living expenses.
Next, think about joining the military's Thrift Savings Plan (TSP) or a similar retirement savings plan, setting aside a part of your income for your retirement savings. It's great that you haven't hastily accumulated credit card debt or bought a vehicle, but now could be the right time to start building your credit history in a responsible manner.
You might want to think about getting a secured credit card, which can aid you in building credit while reducing the risk of spending too much. When you're ready to buy a vehicle, take a good look at your transportation needs and financial status. Choosing a dependable, used vehicle that fits your budget can be a smart move, but remember to factor in costs like insurance, upkeep, and gas.
Finally, don't hesitate to ask for advice from financial counselors provided by the military. They can offer you personalized guidance and support that matches your specific situation. By maintaining a balanced attitude towards spending and saving, you can pave the way for financial security and prosperity in the future.
Next, think about joining the military's Thrift Savings Plan (TSP) or a similar retirement savings plan, setting aside a part of your income for your retirement savings. It's great that you haven't hastily accumulated credit card debt or bought a vehicle, but now could be the right time to start building your credit history in a responsible manner.
You might want to think about getting a secured credit card, which can aid you in building credit while reducing the risk of spending too much. When you're ready to buy a vehicle, take a good look at your transportation needs and financial status. Choosing a dependable, used vehicle that fits your budget can be a smart move, but remember to factor in costs like insurance, upkeep, and gas.
Finally, don't hesitate to ask for advice from financial counselors provided by the military. They can offer you personalized guidance and support that matches your specific situation. By maintaining a balanced attitude towards spending and saving, you can pave the way for financial security and prosperity in the future.
Kevin P Hust, MBA
Risk Administration and Army Officer
201
Answers
Dallas, Texas
Updated
Kevin P’s Answer
Brock, I’ve been in 18 years. I’ve seen alot of crazy things. Craziest I’ve seen is a private drive a brand new Mustang GT. Long story short, THAT is a terrible financial decision. Zero saving all the spending!
First and foremost, make a list of the things you must buy, for a new Soldier living on base it’s a pretty short list. BUT get a credit card and use it for that stuff. Do not go into debt but just use it to buy things you need to anyway. This builds credit in a safe manner. This is crucial to future financial success.
I assume your retirement is linked to the blended program. Maximize this.
Next save at least 20% of every paycheck. Once you have saved up 6 months of expenses put this money into an investment. Just open an IRA with a bank and put it in there. Some easy investment. Like an S&P500 ETF.
If you can add more, great, but never less than 20%. Then the rest can used for expenses. I wouldn’t spend more than 25-35% of your check on a car to include insurance. If you don’t need one right now, save this money in a separate account for a future down payment to a car.
At some point you may want to buy a house. Luckily you’ve been saving. Everything you do is for the future. This is not a sprint, this is a marathon. You don’t need to impress anyone with a fancy car. You’ll be retirement enjoying life long before them.
After I was in 14 years, I had enough to get myself a Mustang. A dollar saved today is worth a lot more in the future.
First and foremost, make a list of the things you must buy, for a new Soldier living on base it’s a pretty short list. BUT get a credit card and use it for that stuff. Do not go into debt but just use it to buy things you need to anyway. This builds credit in a safe manner. This is crucial to future financial success.
I assume your retirement is linked to the blended program. Maximize this.
Next save at least 20% of every paycheck. Once you have saved up 6 months of expenses put this money into an investment. Just open an IRA with a bank and put it in there. Some easy investment. Like an S&P500 ETF.
If you can add more, great, but never less than 20%. Then the rest can used for expenses. I wouldn’t spend more than 25-35% of your check on a car to include insurance. If you don’t need one right now, save this money in a separate account for a future down payment to a car.
At some point you may want to buy a house. Luckily you’ve been saving. Everything you do is for the future. This is not a sprint, this is a marathon. You don’t need to impress anyone with a fancy car. You’ll be retirement enjoying life long before them.
After I was in 14 years, I had enough to get myself a Mustang. A dollar saved today is worth a lot more in the future.
John Medeiros MS EHS
Environmental Health and Safety Manager (Seeking Next Great Opportunity)
65
Answers
Lakeville, Massachusetts
Updated
John’s Answer
Brock
I have one son in the Navy and one son in the Marine Corps; this is what I told them. I have never been as broke as I was as a married specialist in the military. Then I gave them this advice.
Do not put the minimum into your TSP. Try to put 7% but no more than 15%. Raise it up when you get set overseas. They both had sea duty, something I was thankfully spared as I was in the Army. I have done this on deployment. When they send you somewhere where you can't spend much money, sure, save more, but also invest in your retirement by increasing your TSP.
Don't hesitate to seek guidance when it comes to managing your TSP. The G-fund may be a safe option, but it doesn't offer significant growth. Consider diversifying your investments by exploring stocks, foreign stocks, bonds, and other options. If you're unsure, reach out to the financial planners available at your base. They're there to help you navigate these programs and make informed decisions.
Lastly, try to save a little each paycheck, even if it is $20.00 that you roll over to the next month. Get used to carrying over money. If you can, get a separate savings account so you don't see it every time you look at your checking or debt accounts. This is an excellent time to build some financial discipline and make good financial choices. Besides, if you screw everything up, the military is pretty good at sending you to classes to learn money management. Sure, you will have to dig yourself out of any financial hole you may have put yourself in, but better to learn where people are there to help you for free.
Good luck.
I have one son in the Navy and one son in the Marine Corps; this is what I told them. I have never been as broke as I was as a married specialist in the military. Then I gave them this advice.
Do not put the minimum into your TSP. Try to put 7% but no more than 15%. Raise it up when you get set overseas. They both had sea duty, something I was thankfully spared as I was in the Army. I have done this on deployment. When they send you somewhere where you can't spend much money, sure, save more, but also invest in your retirement by increasing your TSP.
Don't hesitate to seek guidance when it comes to managing your TSP. The G-fund may be a safe option, but it doesn't offer significant growth. Consider diversifying your investments by exploring stocks, foreign stocks, bonds, and other options. If you're unsure, reach out to the financial planners available at your base. They're there to help you navigate these programs and make informed decisions.
Lastly, try to save a little each paycheck, even if it is $20.00 that you roll over to the next month. Get used to carrying over money. If you can, get a separate savings account so you don't see it every time you look at your checking or debt accounts. This is an excellent time to build some financial discipline and make good financial choices. Besides, if you screw everything up, the military is pretty good at sending you to classes to learn money management. Sure, you will have to dig yourself out of any financial hole you may have put yourself in, but better to learn where people are there to help you for free.
Good luck.
Jamie Turner
Radar Technician
4
Answers
Augusta, Georgia
Updated
Jamie’s Answer
Hello Brock
First off I want to say thank you for your service! Rather than give advice I'll just share some of my financial journey with you. At 18 I couldn't afford a plane ticket home so I took out a $700 loan from my bank. The term was 6 months, I don't remember the the interest rate. I paid off the loan through automatic debits from my account over the six months. That jump started my credit profile and allowed me to get an unsecured credit card.
If I could start all over with savings, I would put 10% into the C fund (in the TSP) to start and incrementally bump up the percentages as I got promotions and pay increases. I would also open a USAA checking account. There's no minimum balance fees and you get reimbursed for atm usage fees up to $21 (I believe) per month. I'd put 5% to 10% of my take home pay into that account (outside of my normal bank account) as an emergency spending fund (i.e. car issues, an unexpected bill, new boots, etc).
Hope this helps. As always, seek professional advice especially when it comes to your finances.
First off I want to say thank you for your service! Rather than give advice I'll just share some of my financial journey with you. At 18 I couldn't afford a plane ticket home so I took out a $700 loan from my bank. The term was 6 months, I don't remember the the interest rate. I paid off the loan through automatic debits from my account over the six months. That jump started my credit profile and allowed me to get an unsecured credit card.
If I could start all over with savings, I would put 10% into the C fund (in the TSP) to start and incrementally bump up the percentages as I got promotions and pay increases. I would also open a USAA checking account. There's no minimum balance fees and you get reimbursed for atm usage fees up to $21 (I believe) per month. I'd put 5% to 10% of my take home pay into that account (outside of my normal bank account) as an emergency spending fund (i.e. car issues, an unexpected bill, new boots, etc).
Hope this helps. As always, seek professional advice especially when it comes to your finances.
John Fellows
Signal Officer
5
Answers
Richmond, Virginia
Updated
John’s Answer
Brock,
All good advice above.
For a young Soldier, just stay away from the establishments that park themselves right outside of the gates of a Military post. Loan sharks, bars, gentlemen clubs, used car dealers, love to get their claws into naive young men looking to blow their paycheck on useless things.
They will also try to get you to agree to some kind of loan that is way above the normal interest rate. They'll give you $1000 cash today then you'll be forced to pay them back $5,000 over time.
If it looks shady, feels shady, avoid it.
V/R,
John
All good advice above.
For a young Soldier, just stay away from the establishments that park themselves right outside of the gates of a Military post. Loan sharks, bars, gentlemen clubs, used car dealers, love to get their claws into naive young men looking to blow their paycheck on useless things.
They will also try to get you to agree to some kind of loan that is way above the normal interest rate. They'll give you $1000 cash today then you'll be forced to pay them back $5,000 over time.
If it looks shady, feels shady, avoid it.
V/R,
John
George Katsinis Jr. - AFC®
Personal Financial Counselor
45
Answers
Salem, Oregon
Updated
George’s Answer
PLEASE contact one of your Personal Financial Counselors (like me) for specific guidance on your situation and your goals.
1. A Month-to-Month "Spending Plan"... ALWAYS! WRITTEN ALWAYS! (many great apps).
2. Emergency Fund... ALWAYS!
3. TSP @ 5% Roth C Fund is a "no-brainer" minimum.
4. Grow credit score while controlling and minimizing debt.
...more to consider depends upon your values, goals, lifestyle, etc.
Contact your favorite Personal Financial Counselor.
Simplifi by Quicken is my favorite "Spending Plan" app.
MyPay 5% minimum in TSP Roth. TSP.gov app Move $$ out of L Funds into"C Fund"
Talk about structuring Emergency Funds for liquidity AND growth.
Talk about car buying with your favorite Personal Financial Counselor.
1. A Month-to-Month "Spending Plan"... ALWAYS! WRITTEN ALWAYS! (many great apps).
2. Emergency Fund... ALWAYS!
3. TSP @ 5% Roth C Fund is a "no-brainer" minimum.
4. Grow credit score while controlling and minimizing debt.
...more to consider depends upon your values, goals, lifestyle, etc.
George recommends the following next steps: