Military Member's Guide to Investing From E-1 to O-10

When people ask me for financial advice, the first question I ask them is “Do you have a budget?” Most of the people respond “No”, but some people do surprise me and say yes. My immediate follow-up question is: “Do you have your budget written down on paper or on the computer?” When they say no, I tell them they really don’t have a budget. In order to have a real budget, one that you will stick to and use as your golden path to financial freedom, you MUST write it down on paper or on the computer.  Don’t get me wrong, you can change your budget as needed when certain life changes happen, i.e. baby, marriage, etc.  I found out my wife was pregnant with my first daughter on Christmas Eve 2002, we were totally surprised because my wife went in for her annual womanly checkup and she got a phone call a few hours later telling her she was “Slightly” pregnant. How can someone be slightly pregnant? Either you are or you aren’t!  So we took the at-home pregnancy tests to confirm the results and BOOM we were pregnant.  That next day I reworked our budget to adjust for extra food, diaper costs, and college fund for my daughter.  Life changing experience solved by readjusting the budget. Just to let you know, when I was writing this book that same thing happened again. We got pregnant with my second daughter and I readjusted the budget again. 

Setting up a budget is very simple to do; you just need to start with a good shell. What I suggest doing is going through your old receipts for bills, gas, food, entertainment, etc., for the amounts that you spent.  This will give you a baseline for your spending. If you don’t want to do this, carry around a notebook and record your expenses as they happen. You will be amazed on how much you spend.  Once you set your baseline on what you spend, pull out your Leave and Earning Statement or LES to see how much you make.  Once you have all the info, it is time to make your budget. 

Use the budget worksheet at the end of this chapter to help you with your planning. You can easily make your own budget on the computer and put your information in it.  Once you do that, you are ready to plan.  You should always treat savings as a bill.  This is the only way you will be able to build your nest egg.  Savings should be a must pay bill.  Pay yourself first.  I’m not saying go delinquent on your bills, but work savings into your budget so that it works.  Setting up a budget is not hard, but the end result you are looking for is spending less than you take home, meaning a surplus. If you have a deficit, spending more than your take home, I recommend taking a hard look at your expenses and if it means cutting back on entertainment or eating out less… so be it.  You don’t want to drown in debt.