Another Friday is upon us, and that means another of Michael Schneider’s short pieces about good financial habits. This post, about how to develop a basic budget, gave me an opportunity to evaluate my own family’s practice and make some much-needed tweaks. Schneider’s columns are accessible, fun, and practical; I hope you get as much out of them as I do. If so, share with friends, and encourage them to subscribe. It won’t cost a penny, and it could save you a few in the long run!

THE BIG STORY

How to Build a Budget

Budgeting comes naturally to some. But many go their entire lives without ever building a formal budget.

Service members rarely back away from a challenge, and this should extend to personal finances and budgeting as well. With field exercises, TDYs, and deployments how can you ever find the time to build a personal or family budget? You have to find time, is the answer. Building a budget and automating many pieces of that budget will free up time to spend on the important and fun aspects of life. To be very clear, budgets suck. But if you can view money as a tool to live how you want now and in the future, a budget is essential to maintaining the same ideal for which you serve or served: freedom.

You have probably heard of Dave Ramsey, or other semi-famous personal finance gurus. While they certainly serve a purpose, let's be honest, sometimes those figures seem like your First Sergeant on Friday afternoon piggybacking off the safety brief your commander just shared: you’re hearing what they’re saying, but you’re not sure why you need to hear it right now. In this article we will share a basic framework and concepts to help you build and execute a budget. I have been there, having the hard conversations with my spouse around finances. As uncomfortable as these conversations are, I wish I had them years prior, in order to set our spending priorities straight and enable us to achieve the future we want for our family.

The good news is, the sooner you start, the easier it becomes and the more useful it is over a lifetime.

The standard school of thought is to break down your income into percentages of needs, wants and savings. 50% of your income is budgeted for needs such as rent or mortgage, car payments, groceries, utilities - think food and shelter. Next, 30% is for wants or things that are not essential. If you want to pay for a gym membership off post, vacations, meals out or new running shoes because you know the new PL is runner. Last but certainly not least, 20% is allocated to savings and investments. We wrote about the TSP recently and that savings is certainly part of this bucket.

Thankfully, your pay as a service member is already somewhat segmented into these buckets (think BAH, BAS, etc). Let’s take an example. Using brand new 2nd LT Smith, who is stationed at Fort Moore (formerly Fort Benning), and has no dependents. LT Smith brings home roughly $3,600 each month in base pay and $1,314 in housing allowance, so a conservative estimate of income is $4,900 each month. This does not include BAS or other potentially applicable pay. If LT Smith puts all of his BAH towards a mortgage payment, that is ~25% of income and thus, he or she has another 25% to pay for utilities, car payment and groceries. Knowing this can help set actual dollar number amounts for how else LT Smith can spend his or her income. Based on the approximate income, LT Smith has $1,470 to spend on wants and $980 on savings. LT Smith should contribute $245 each month to a TSP account, in which case Uncle Sam will contribute $245 as well - but that leaves…checks math, $735 to contribute to savings to match the 20% allocation. This is where your personal financial goals should define your savings and investment strategy.

The whole point of these buckets is to allow a full picture of where you are spending and saving, and hopefully, enable you to buy the things you want in due time. These buckets are general guidelines, if you truly enjoy eating meals out, or attending concerts, you can build your budget to fit these items you love by adjusting your spending in other areas.

TOP READS IN MONEY & FINANCE

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…and that’s led to historical rates of speculation. It’s a serious problem.

630am: “Job market expected to be weak, not sure it can go the distance.” 730am: “Damn, job market got hands.”

French high speed train manufacturer may be about to jump the tracks.

A backdoor to FTX allowed the company to carry a negative $65 billion balance. Workers at the company knew of its existence for months before the collapse.

Mortgage rates hit almost 7.5%. In the late 1980s, my parents bought their house with a mortgage rate that was over 10%. It can get worse!

Trump era tax cuts are set to expire in 2025. Now’s the time to figure out what that could mean for your budget, before it’s too late.

TOP READS IN THE MILITARY

Pregnancy is no longer cause for dismissal at Service Academies.

If you have to ask the question “do these computers sold at Navy Exchange pose a cyber security threat,” odds are, yeah, they do (guessing that means they come with War Thunder pre-installed).

Two soldiers were killed in Alaska when their vehicle rolled over. More were injured.

TOP READS FOR VETERANS

A damning report by The Quincy Institute, which is pretty dumb and backwards when it comes to foreign policy such as its position toward Ukraine (basically pro-Russian), but often has useful criticism when it comes to domestic policy.

A fentanyl dealer who sold the drugs that killed a Marine was sentenced to life in prison.

Will the VA be able to provide abortions? Maybe, maybe not. Staff are concerned by the lack of clarity.

TOP READS AROUND THE WORLD

Germany’s sending Ukraine a second Patriot air defense system. As the U.S. balks at sending aid, seems funny that Germany, of all countries, is stepping into the gap. Well — they have the industrial base for it!

Alibaba accused of possible espionage, which is more like, just, espionage.

3M is in trouble. Lots of bad press and lawsuits and a jacked-up R&D pipeline has the manufacturer looking for a win.

The U.S. shot down a Turkish drone for attacking (or being a threat to) U.S. troops in Syria, causing a crisis in diplomatic relations between the two. Fortunately, I see a way out. The U.S. can justifiably invoke NATO’s Article Five against Turkey (the drone threatening troops) and Turkey can justifiably invoke NATO’s Article Five against the U.S. (shooting down said drone). With NATO at war with Turkey and the U.S., the only solution would be — that’s right — a U.S. / Turkish alliance against the rest of NATO. Nicely resolving the diplomatic crisis as two former enemies fight back to back, friends again.

HUMOR

Huge loss for the left, as explained by satirical news site “Clickhole.”