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When I first joined the military, I was focused on the here and now. The “here” usually meant whatever restaurant or store I happened to be in, and the “now” was this pay period.
It wasn’t that I didn’t have any savings goals, it was that they were either very immediate (I will buy that phone when it is released next month) or super unfocused (someday I may want to buy a house).
The problem was that even though I had a mom who was thrifty because she had grown up poor, I didn’t really understand HOW to save. The actual mechanics of it.
I didn’t know that saving is a habit, like any other habit. That it’s something that you have to work on consistently and internalize.
I didn’t know that I ought to have saving goals, plural.
I didn’t realize that the best way to save is automatically (https://rly.pt/32GEIy9) – by having a portion of my pay go into a separate savings account each month.
And most importantly, I didn’t understand that saving is something that has to happen continually over a lifetime.
That sounds way more depressing than it should. Saving is not a burden; it can be very freeing. There is an indefinable peace of mind that you get when you know that getting new brakes or having a root canal or buying a plane ticket home to see a sick relative is not going to send you spiraling into credit card debt because you have a healthy emergency fund (https://rly.pt/3enuF6M)
But the reality is that saving is a process more than an end state. You build up your emergency fund over a few months, and you may have a certain number in your head that you are trying to reach, maybe it’s 3 months of living expenses or maybe it’s $1,000. If you deplete that emergency fund because you desperately need new tires, then you must replenish it.
And once you are in the habit of saving, you will find that you are suddenly able to juggle multiple savings goals at once. My husband and I are simultaneously saving for retirement, a new car, our daughters’ education, and a big vacation.
This would have seemed impossible to me when I was young. I could barely pay my bills and didn’t have anything left over to save. But I was looking at it all backwards: I needed to save something *first,* even if it was only a few dollars, and then take care of the bills. Eventually, I didn’t even notice our allotment going to our savings account. I just had to overcome the inertia and get started.
If you want to get started saving, or simply want to hone your savings habit, visit militarysaves.org (https://rly.pt/3cgfI6G) and take the Military Saves Pledge (https://rly.pt/3renCl2) which is just the start of a simple spending plan. We’ll support you on your savings journey, because it’s a long road, but it doesn’t have to be a bumpy one.
It wasn’t that I didn’t have any savings goals, it was that they were either very immediate (I will buy that phone when it is released next month) or super unfocused (someday I may want to buy a house).
The problem was that even though I had a mom who was thrifty because she had grown up poor, I didn’t really understand HOW to save. The actual mechanics of it.
I didn’t know that saving is a habit, like any other habit. That it’s something that you have to work on consistently and internalize.
I didn’t know that I ought to have saving goals, plural.
I didn’t realize that the best way to save is automatically (https://rly.pt/32GEIy9) – by having a portion of my pay go into a separate savings account each month.
And most importantly, I didn’t understand that saving is something that has to happen continually over a lifetime.
That sounds way more depressing than it should. Saving is not a burden; it can be very freeing. There is an indefinable peace of mind that you get when you know that getting new brakes or having a root canal or buying a plane ticket home to see a sick relative is not going to send you spiraling into credit card debt because you have a healthy emergency fund (https://rly.pt/3enuF6M)
But the reality is that saving is a process more than an end state. You build up your emergency fund over a few months, and you may have a certain number in your head that you are trying to reach, maybe it’s 3 months of living expenses or maybe it’s $1,000. If you deplete that emergency fund because you desperately need new tires, then you must replenish it.
And once you are in the habit of saving, you will find that you are suddenly able to juggle multiple savings goals at once. My husband and I are simultaneously saving for retirement, a new car, our daughters’ education, and a big vacation.
This would have seemed impossible to me when I was young. I could barely pay my bills and didn’t have anything left over to save. But I was looking at it all backwards: I needed to save something *first,* even if it was only a few dollars, and then take care of the bills. Eventually, I didn’t even notice our allotment going to our savings account. I just had to overcome the inertia and get started.
If you want to get started saving, or simply want to hone your savings habit, visit militarysaves.org (https://rly.pt/3cgfI6G) and take the Military Saves Pledge (https://rly.pt/3renCl2) which is just the start of a simple spending plan. We’ll support you on your savings journey, because it’s a long road, but it doesn’t have to be a bumpy one.
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1LT Lila Quintiliani Savings are wasted on youth. When I was younger I wasn't thinking of the future or what it held, I was living in the moment. I really started saving after my wife died. I took her money out of her teachers retirement system and added it to mine. When I left teaching and got a job on the Navy base, I took all that money out and added it the the TSP. When I retired from the Navy base I eventually put all that money into a First Command account. That is over a half a million now and thats not counting other assets my current wife and I have now. I am a spender, my wife is the thrift person. I wish I had really started saving earlier. It is so important for young people.
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CPT (Join to see)
"Time" is the most influential variable in the Time Value of Money formula.
For a 20 year old (retiring at 60) a dollar saved today grows to the power of 40 years. (1+rate of return) raised to the power of 40. Then it's added to the second year raised to the power of 39, then added to the third year raised to the power of 38, and so on.
If one can STOP saving at 30, having saved from ages 20-29 and they will more money than the person that STARTS saving at 30 and saves for the next 30 years till 60. Because they gave up the benefit of the savings raised to the power of 40,39,38,37,36,35,34,32,31
Example........
I personally walked away from my financial career at the age of 38. Now, I can't tap my savings until I retire, but I don't need to add a dime more to it. That allowed me to join the USAR at 38 as an E4 and as long as I basically covered my living expenses I just jumped around from orders to orders making enough to get buy and just focus on what I want to do.
Now, I wont throw my portfolio balance numbers out, but when I finally do retire at 60-62 I can draw twice as much as I ever made in my best income year and it will last me until I am age 95. If I presume I live to 105 it will still be 1.5X more than my best previous year.
I am presuming only a 8% portfolio return the next 10 years and a 5% return during my retirement years (relatively conservative estimates).
For a 20 year old (retiring at 60) a dollar saved today grows to the power of 40 years. (1+rate of return) raised to the power of 40. Then it's added to the second year raised to the power of 39, then added to the third year raised to the power of 38, and so on.
If one can STOP saving at 30, having saved from ages 20-29 and they will more money than the person that STARTS saving at 30 and saves for the next 30 years till 60. Because they gave up the benefit of the savings raised to the power of 40,39,38,37,36,35,34,32,31
Example........
I personally walked away from my financial career at the age of 38. Now, I can't tap my savings until I retire, but I don't need to add a dime more to it. That allowed me to join the USAR at 38 as an E4 and as long as I basically covered my living expenses I just jumped around from orders to orders making enough to get buy and just focus on what I want to do.
Now, I wont throw my portfolio balance numbers out, but when I finally do retire at 60-62 I can draw twice as much as I ever made in my best income year and it will last me until I am age 95. If I presume I live to 105 it will still be 1.5X more than my best previous year.
I am presuming only a 8% portfolio return the next 10 years and a 5% return during my retirement years (relatively conservative estimates).
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SFC Randy Hellenbrand
CPT (Join to see) - Absolutely!! That is why I started on my grandkids the day they were born.
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1LT Lila Quintiliani, in the financial services world, wealth is composed of three phases: accumulation, distribution (taking income from savings in retirement), and transfer (passing remaining wealth to heirs upon death).
With that in mind, continuing to save does not occur during retirement (or the distribution phase). One may simply elect to not spend a portion of that which has been accumulated. So to answer your question literally, the saving function does end. I’m splitting hairs, I know, but that’s what occurs.
Nonetheless, I appreciate your thoughts on saving and your ability and creativeness to accomplish that which many will not even try.
SFC William Farrell CPT (Join to see) SMSgt Lawrence McCarter Lt Col John (Jack) Christensen CSM Charles Hayden
With that in mind, continuing to save does not occur during retirement (or the distribution phase). One may simply elect to not spend a portion of that which has been accumulated. So to answer your question literally, the saving function does end. I’m splitting hairs, I know, but that’s what occurs.
Nonetheless, I appreciate your thoughts on saving and your ability and creativeness to accomplish that which many will not even try.
SFC William Farrell CPT (Join to see) SMSgt Lawrence McCarter Lt Col John (Jack) Christensen CSM Charles Hayden
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CSM Charles Hayden
LTC Stephen C. Being 87 years of age should place me firmly in the ‘distribution’ phase. I distribute, beyond my previous ability, my sons and grandchildren appear to appreciate my gifts as they decry any need for additional assets.
However, one spending habit remains at this stage of my life, “don’t buy anything that is not really needed!”
My lady friend shares this malady with me. We buy what we want or think we need, but our actual wants / needs have diminished immensely!
However, one spending habit remains at this stage of my life, “don’t buy anything that is not really needed!”
My lady friend shares this malady with me. We buy what we want or think we need, but our actual wants / needs have diminished immensely!
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1LT Lila Quintiliani
LTC Stephen C. - I appreciate your comments, and while I am familiar with the concept of decumulation, I still believe that saving is a mindset, and if someone doesn't have that type of habit ingrained in them by the time they reach retirement, then they will still run into difficulties. Saving is a process more than an endstate.
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When I was a 2LT, a Major gave me some good advice. Always live two pay raises behind your current pay, and bank the raises. Then when you get another bump, take the oldest raise for current spending and bank the new raise. When I was in the raises came frequently at first - over one year, 1LT at 18 months, over two years, Capt. and over three at three years, ...etc. The pay bumps were small, but the habit of saving was formed early.
He also recommended that we record our checkbook totals at the next larger whole dollar amount so that we were always building a buffer and never had to worry about bounced checks - which the Command frowned upon.
He also recommended that we record our checkbook totals at the next larger whole dollar amount so that we were always building a buffer and never had to worry about bounced checks - which the Command frowned upon.
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