Tips on Saving Money in the Military

When serving the country, monitoring your finances and making the necessary investments can become extremely challenging. However, financial planning is one of the mandatory steps you should take to secure your family's future. So, it would help if you took time from your busy schedule to care for them.   

Here is a comprehensive guide on saving money in the military, its importance and some popular investment options to park your funds.

1. Create a Budget

2. Avoid Going into Debt

3. Build an Emergency Fund

4. Save for Future Expenses

5. Create a Savings Account

6. Start Saving for Long-Term

7. Be Careful with Credit Cards

8. Build a Good Credit Score

9. Use Military Benefits Wisely

10. Shop for Necessities on Base

11. Purchase a Life Insurance Policy

12. Save for Retirement

13. Avoiding Overspending

14. Automating Your Savings

When in the army, paying the EMIs, premiums, and investments on time can become difficult. Also, delaying them can lead to severe adverse consequences. Hence, you can automate your savings to automatically transfer the amount. This will provide you with limited cash and help you to make judicious use of funds.

However, only knowing how to save money in the army is not enough. You should also know the importance of saving and investing to stay aligned and take steps accordingly.

When in the military, you might not be able to increase your income sources. So, it becomes mandatory to save for countless reasons. Some of the crucial ones among them include: 

• Provides for children’s education: Education has become highly expensive recently. So, to ensure that your kids receive the best education, you should start saving as early as possible.
• Offers you peace of mind: You can stay worry-free about your family meeting any financial emergency. This allows you to go to the battlefield without additional tension about your family.
• Helps achieve short-term goals: Fulfilling short-term monetary goals is as important as financing long-term ones. Your savings in a bank account and smaller funds can help your family achieve the same.
• Provides security to your family: Since you are away from them and might not be able to contact them daily, it becomes crucial to ensure that they always have sufficient funds to meet any financial emergency.
• Gives you a better future: A proper saving plan ensures sufficient funds after retirement. This can help you plan your retirement the way you want without facing any financial constraints.

You can choose several policies for investing while in the military. However, finding the right ones can become difficult at times.

High-Risk Investment

These are the ones which fluctuate as per changes in the money market. So, even though they can provide you with substantial returns, there is also a chance of facing immense losses. Some of them include:

• Direct Equity: The stock market fluctuates rapidly, making it vital to be monitored continuously. Also, you must study the stock market over time to select the right ones to invest in. Once done, you can receive substantial returns over a shorter duration.
• Debt Mutual Funds: Compared to equity, they are less volatile and can provide steady returns. You can easily estimate the returns from these funds as interest remains fixed. They include financial instruments like treasury bills, commercial paper, corporate bonds, government securities, etc.
• Unit Linked Investment Plans (ULIPs): Are you looking for investment and life cover under one premium? This is possible by purchasing ULIPs. One part of the premium goes for life cover, and the other is deposited in money market funds. So, there is a chance of facing losses when selecting the wrong assets.

Medium Risk Investment

This type usually offers a balanced and diversified investment. This usually requires you to divide your money into equities and debt mutual funds. Thus, you can get sufficient returns with moderate risks of losses so that you can create substantial wealth over a longer duration. These usually include the following options:

• Monthly Income Plans: These are debt-oriented plans where about 70% to 80% of your investments are parked in debt funds.
• Arbitrage Funds: These are equity-oriented hybrid funds that leverage arbitrage opportunities in the market.
• Hybrid-Debt-Oriented Funds: These are a combination of equity and debt funds where the percentage of investment in debt funds is slightly more than equity.

Low-risk Investment

The returns from these funds are not dependent on market sentiments. Hence, you can park money in these funds to generate a stable income over a longer duration. Some of the best investment plans of this type include:

• Public Provident Fund: This scheme usually has a tenure of 15 years and offers a safe investment and stable and tax-free returns. Thus, you can invest in them if you are looking for a safe option.
• Bank Fixed Deposits: FDs provide a high-interest rate ensuring stable returns on parking money in these accounts. Also, there are several additional benefits that you can reap, making it a good investment option.
• Gold: The price of gold keeps increasing, making it a suitable investment option. You can purchase gold coins from numerous banks and sell them at a higher price to any jeweller when you need funds.