Do you like money? Lets take a moment and talk about the money.

I'm making this because far to often I notice SMs of all ranks and all branches struggling with financing and budgeting. Many of us come in young at 17 or 18 and never really get an instruction on good spending habits... So here is my input.


Ok: disclaimer. I am by no means a professional on the matter nor do I have any official certification to give people advice on how or what to do with their money. I simply have read many budgeting and money management books. Watched youtube video after youtube video of advice and as a result I don't hurt for money and am in a place to be financial secure. This information is what I've found works for me.

Budgeting:
I took what is known as "Fidelity's 50/15/5 Rule." and tweaked it slightly to be "50/15/5/5" (If I've already lost you, stick with me.. it's all going to come together)

50/15/5/5 Rule of Budgeting Explained Barney Style!

First- 50
50% of your income should go to bills. That's including mortgage/rent (when budgeting include your BAH in for overall income. but monitor it individually, hold the remaining for specific budgeting) , insurance(Car/Home owners/Renters etc), grocery (if married with a reasonably sized family try to utilize your BAS only. I coupon shop everything, it all adds up), internet, cell phones,cable, gas, everything. This is a maximum amount. If your bills are lower, great!!
I'm going to note here, as far as home entertainment goes to save some extra bucks, in our modern age if you have cable/internet/cellphones/ and you're reasonably tech savvy take a serious look at utilizing monthly paid online entertainment (netflix/hulu/amazon prime) and cutting off your cable. If there are specific things you like provided by cable, call your service provider and tell them you plan to discontinue serve. They will jump through any and all hoops just to keep your account active and you can probably get a package design for the entertainment you want and use for far cheaper than what you're currently paying)
Also this is for home owners. Take what is remaining on your BAH from a monthly mortgage payment and pay that directly into your mortgage each month. Example is if your monthly mortgage and escrow is 500$ and your BAH monthly is 1000 then go ahead and pay 500$ into your mortgage extra each month.

SECOND 15-
15% should go to retirement. While we're in the military this is your TSP.

THIRD - 5
5% Should go to leisure. This includes your things like your pedicures, dates, snacks, shiny new toys, cigarettes, alcohol, eating out, games, fun activities, etc. For when you want to buy those big ticket leisure items (firearms, new gaming system, massive new 70' tvs, etc) DON'T surplus spend thinking you'll make it up. Instead take a tactical pause and limit the surplus for a month or two until you have put away enough for that big ticket item (this money is separate from short term savings). Then when you have the money in the bank already go out and buy it.

LAST- 5 (This one is commonly overlooked by single soldiers and families alike)
The last 5% should go to short-term savings. This is a contribution to your Emergency Savings Fund. This Short-Term Savings/emergency fund should be built up to cover all your living costs for a minimum of 6 months. to cushion the financial blow from unforeseen events. This is you and your families financial safety net. Do not touch it except for emergencies.

But what about that last 25?
Where that other 25% goes is up to you. If you're in debt, including student, home, and auto loans, pay them off early. If you want to retire early, put it into a retirement account. If you want a new car, save for it. Paying rent instead of a mortgage? Save up for that 20% down payment . You could also save for your or your child's education if you like. Or put it into a fund for a vacation. It's your choice. It's your money. I'm not telling you what you have to do.

One of the biggest temptations and pitfalls (especially for young soldiers) is the desire to put that extra 25% into the "fun" fund. Well, that's up to you. However, keep in mind that saving for retirement, a home, and transportation is going to give you a much greater psychological and financial reward. Imagine having no more debt. No credit card debt, no student loans, no mortgage, no car payment, no other loans, notta! Zip! How much money would pour back into your budget? $2000? $4000? It's worth it to put it towards other things for now.

Lastly.. If your bills are down to 50% and the 5% fun money feels too constrictive then consider a middle ground. Try a bump to 10% or 15% for fun money and/or putting 15% towards long-term investments like debt payoff and retirement.

Some Helpful Links if you like what you read here today!

Budget Templates:
If you're savvy with Excel I'd advise simply making your own Budget template for tracking your spending. If you cannot find something that works for you in the links below and you're not exactly how to make one in excel... Don't hesitate to send me a PM here on rallypoint and I'll be happy to put one together for you based on your needs.

Family Budget Planner: http://www.spreadsheet123.com/ExcelTemplates/family-budget-planner-spreadsheet.html
Personal Budget spreadsheet: http://www.spreadsheet123.com/ExcelTemplates/personal-budget-spreadsheet.html
HouseHold Budget Planner: http://www.spreadsheet123.com/ExcelTemplates/household-budget-planner.html
Personal monthly budget Planner
http://www.spreadsheet123.com/ExcelTemplates/monthly-budget-planner.html


Some more info for those still interested?
Short video on how to make a fidelity budget
https://www.youtube.com/watch?v=yKH0psvs0I4

Three things to know about your emergency fund:
https://www.youtube.com/watch?v=tlE7Pwx5Ehg


If you've read this far thank you. I hope if this even helps one of you I'm happy making the post. I'll try to answer any questions within the comments but as I said I am not a professional this is just what I do.

Depending on this is post is received and if people need it, I could do a follow on post for people who notice their bills are exceeding 50% a month or simply a list of tips to bring down surplus spending.

Once again this is a hobby I love and I wanted to share with the community. I apologize for how unorganized to post seems but rallypoint doesn't really have great options for type interface (psst admins). Anyway, thank you for reading.