The path to a strong financial future

  • Published
  • By 51st Comptroller Squadron
OSAN AIR BASE, Republic of Korea --  Taking care of Airmen and their families is a strategic priority at every level in the Department of Defense. One aspect of this strategic priority is providing them with personal financial management education and tools. I would like to share some of the basic financial management concepts and tools that will assist Airmen and their families with improving their financial situation, or even possibly becoming a millionaire.

The first step is to know and understand your pay. This begins by reading your monthly Leave and Earning Statement. You can view your LES and make changes to your pay at MyPay. It is very important to understand your monthly pay entitlements, deductions and allotments that are identified on you LES. For assistance with reading your LES, you can visit: DFAS. Understanding your LES includes knowing what your entitlements are based on and ensuring the information is accurate. Once this is accomplished, you can anticipate and plan for changes in pay entitlements and allowances.

In order to validate the accuracy of your base pay, basic allowance for subsistence, special incentive pay and deployment entitlements, visit DFAS.

You can check your basic allowance for housing, cost of living allowance and dislocation allowance by using the calculators located at Defense Travel.

Once you understand your pay, the next step is to build a personal financial plan. The old saying, "If you fail to plan, then you plan to fail," definitely applies to personal financial management. Your plan should be simple and realistic for your lifestyle. Consider your pay, expenses and investments. It is important that you anticipate and plan for annual pay raises, promotion pay raises, bonuses, additional pay from deployments such as hazardous pay, combat zone tax exclusion, family separation allowances and other entitlements. This will allow you to use the additional income to effectively execute your personal finance plan.

You can forecast pay entitlement changes for deployments and permanent change of station, by using calculators located at AF Portal - Life and Careers - Money - Wlcome to Virtual Finance - Tools. You should also anticipate and plan for large expenses such as PCS moves, home and car purchases, getting married and the birth of a child. Planning these expenses will help keep you out of debt and high interest rate loans and credit cards.

For assistance with building a personal finance plan, visit Military One Source, or your Airman and Family Readiness Center. You can view an example of a personal finance plan at Military Home Front.

Once you have a simple personal finace plan, the next step is to invest. The Thrift Savings Plan gives military members the opportunity to take advantage of investments that will grow tax deferred. You can visit TSP to establish and maintain a TSP account. An additional opportunity is the Deployed Savings Deposit Program, which is available to military members during a deployment at DFAS.

The most important thing, when it comes to investing, is to get started, even if that means you have to start small. Fifty dollars a month is better than nothing. You will be able to increase the amount as you receive additional income trough promotion, annual pay raises and bonuses. The earlier you start, the more possible it is to become a millionaire.

Did you know if you contribute $500 per month for 30 years at an annual return on investment of 10 percent you would have $1 million in your retirement account? In order to forecast growth of your retirement account you can use the TSP investment calculator at TSP.

While becoming a millionaire may not be your financial goal, it is important to take some time to understand your pay, build a personal finance plan and take advantage of the investment opportunities provided by the military. These three simple steps will put you on the path to improving your financial situation. In order to develop a more comprehensive personal financial management plan, you should consider all your military benefits. For additional information on military pay and benefits, visit Military Pay.