Military families should always make time to conduct an annual financial review. After all, a lot can happen in the span of one year. You want to make sure that your finances are always updated.
A financial review means you will look at all the aspects of your family’s finances. You will look at your income and the various expenses that you spend on each month.
If you want your family to be financially prepared for the future, this is a necessary thing for you to do. You have to always update your finances so your decisions will always be aligned with your future goals.
What should you do during an annual financial review?
Revisit your financial goals
Take a look at the goals that you have set the previous year. How have things come along since you set them? Have you progressed at all? If yes, then figure out your next steps. Were you forced to postpone some of the goals because of events that happened last year? If yes, then check if you can proceed with the goals or decide if you should completely forget about it. Update your list of goals so you will know your targets for this year.
Decide on what you will change
After looking at your goals, you should have an idea of the change that has to take place in your finances. Do you have to change your financial strategy? Will your goals involve eliminating or adding certain expenses? Maybe it is time for you to have a two-income household? You should also look at the changes that happened to you that can affect the benefits that you will receive in the military. These could influence your monthly income so it deserved to be checked out.
Take a look at your budget
Once you have considered your financial goals and the possible changes that will happen this coming year, it is time to visit your budget plan. You want to make sure that any changes will be reflected in your budget. For instance, if there is a new saving goal, you want to ensure that a portion of your income will be allocated towards that goal. This new budget should help you track the financial changes that you will implement and will play a key role in helping you make financial decisions.
Schedule a meeting with your financial adviser
This is actually not a necessity but if you find yourself confused and having a hard time figuring out your finances, then it is best to just schedule a meeting with a financial adviser. You do not have to do this all the time. You just have to schedule a couple of meetings until you have completely understood the plans that will help you reach your financial goals.
Check how you can maximize your retirement contributions
Do the math and see if you can maximize your annual retirement contributions. This will be really beneficial if your employer matches your contributions. Saving for your future is the best gift and investment that you can give yourself. Not only that, the contributions can lower your taxable income. In case you do not have a retirement plan yet, then you have to start saving up for it.
Give your emergency fund a boost
If you dipped into your emergency fund last year, it is probably a good time to return what you took. You should probably look into adding more into this fund. Make sure your funds can cover between three to six months worth of your expenses. Try to put this in a low-risk account that will allow you to liquidate it easily – but not too easy that you will be tempted to take it when you are feeling generous towards yourself.
Start thinking about your kid’s educational plan
We all know how student loans are making the lives of young adults quite miserable. Do not put your kids in the same position. Start saving up for a 529 Plan. The earlier you start, the more you can save. This will really help your child avoid debt in the future and will guarantee that they will get a higher education regardless of your financial situation.
See how a two-income household will affect your finances
Do not think that having both of parents working will only increase your income. Sometimes, the expenses will increase as well. For instance, you may have to pay for child care while the both of you are working. Whenever one of you are deployed, the one staying at home will have to hire help to ease the burden of household chores. Consider the pros and cons of having your civilian spouse working.
Plan your estate
We do not want to think of death but this is a necessity especially with the dangers of working in the military. Contrary to what you may believe, this is not just for the wealthy. You need to think about estate planning to secure the future of your family. Wills and trusts are important documents that you and your spouse should arrange. If you have insurance policies, make sure the beneficiaries are updated. Just take the time to check these out so you are sure that everything is in order.