How I saved nearly 100k per year after the military
Personal finance doesn't need to be complicated. It's about simple, straightforward principles: spend less than you earn, save and invest wisely, and live within your means. As a veteran, you have unique financial advantages that can significantly boost your income. Here's a step-by-step guide to help you maximize your savings using the GI Bill, VA disability benefits, and the perks of having a security clearance.
Step-by-Step Savings Plan
Calculate Your Monthly Income:
Salary: Let's assume you make $4,000 per month after tax, which is less than the average salary for a job requiring a Secret clearance.
GI Bill BAH (Basic Allowance for Housing): Approximately $3,300.
VA Disability Benefits: Around $2,000 for an 80% disability rating.
Total Monthly Income: $9,300 after tax.
Determine Your Savings Rate: Decide what percentage of your after-tax income you want to save or invest. For example, if you aim to save 70%, calculate it as follows:
70% of $9,300 = $6,510.
Pay Yourself First: Set aside $6,510 for savings or investments as soon as you get paid. This ensures that you prioritize your financial goals before any other expenses.
Budget for Essential Expenses: With $2,790 left, allocate funds for your essential living costs:
Rent: Average studio apartment rent is $1,410. To be safe, budget $1,600.
Utilities: Roughly $200.
Gas: Around $200.
Cell and WiFi: Approximately $100.
Total Basic Living Costs: $2,100 ($1,600 + $200 + $200 + $100).
Manage Discretionary Spending: After covering your essential expenses, you have $690 left for discretionary spending or unexpected costs. This cushion helps you manage your finances without dipping into your savings.
Living Below Your Means: Living below your means involves making conscious choices to limit unnecessary expenses. This can be achieved by reducing how often you go out to eat or drink, buying fewer clothes, and cutting back on other costly activities. Instead of spending money on these things, consider investing in your financial education. Visit a bookstore or order online and pick up a finance book like "Rich Dad, Poor Dad" and a self-development book such as "The One Thing." These resources can help you envision your future steps and learn how to make your money work for you.
The Importance of Financial Discipline
Financial discipline is vital regardless of your income level. The book "The Psychology of Money" by Morgan Housel tells a story about the famous singer Rihanna, who went bankrupt due to overspending and blamed her financial advisor. The advisor responded, "Was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money?"
No matter how much you make, it's crucial to monitor your spending and stay disciplined. By following these simple steps and leveraging your veteran benefits, you can achieve financial stability and build a secure future.
Remember, personal finance is about making wise choices and staying consistent. With the right mindset and strategy, you can save money, invest wisely, and enjoy financial freedom.
