WASHINGTON -- Service members and their families should "start small and think big" when kick-starting a savings plan, a financial expert said Feb. 23.
"It's not what you make, it's what you keep," said Pam McClelland, a senior program analyst in the Pentagon's office of family policy and children and youth. "A little bit can really mean a lot."
Defense Department officials are putting the spotlight on financial readiness, particularly the importance of saving, as part of a larger, national emphasis on financial well-being.
"Military Saves Week," part of "America Saves Week," is an annual event intended to help people become better financial planners.
Officials at military installations around the world are sponsoring financial fairs, luncheons, speakers and seminars, and are working with on-base credit unions and banks, military exchanges and commissaries to build awareness of the importance of financial readiness and to kick off the military's year-round financial readiness campaign, Ms. McClelland said.
The campaign's emphasis is on savings, which is appropriate in today's economy, Ms. McClelland said.
The campaign's slogan, "start small, think big," promotes the long-term benefits of saving even a little bit each month.
"We're now in the world of the 401K," she said. "We don't have pensions waiting for these young folks anymore; it's not your grandfather's retirement plan any more. We've focused a lot on credit up until now, and spend plans, but the emphasis on savings has to be renewed, and we have to do that with our young folks in and out of uniform."
To start, people should devise a savings plan with set goals in mind, whether it's a new house, college education, a trip or retirement, Ms. McClelland said.
She suggested that people figure out what their goal will cost, and then divide that sum by the number of paydays to accomplish the goal.
This gives them incremental goals along the way, she said.
"People would come to me and say, 'I have 200 bucks in my savings account,' and I'd say, 'That's great. What's it for?'" she said. "If they didn't have an answer to that, odds are it's not going to stay there, because they don't have it dedicated to something that's going to make their life better."
A survey of spending and saving habits released Feb. 22 drives home Ms. McClelland's point.
The survey showed that consumers with savings plans are far more likely to save than those without one.
In one survey finding, 85 percent of the people surveyed with a savings plan said they have sufficient emergency savings, while just 50 percent without one said the same.
Additionally, 88 percent of those surveyed with a plan spend less than their income and save the difference, compared to 50 percent of those without a plan.
And 61 percent of those surveyed said they're saving enough for retirement, compared to 27 percent without a plan.
For service members, McClelland pointed to the Thrift Savings Plan as one of the best avenues for jump-starting a long-term savings plan. She encouraged service members who aren't already contributing to their Thrift Savings Plan to start.
"I can't emphasize enough what a wonderful program we have in the thrift savings plan," she said. "TSP makes it easy to save."
Even if service members plan to separate after four years, they should contribute, Ms. McClelland said, since the funds easily can be rolled over to a 401K plan at their new job.
People also can explore savings bonds and savings accounts sponsored by credit unions and on-base banks, she added.
Debt shouldn't be a deterrent, she said, because saving is possible in conjunction with knocking down credit-induced debt.
"You can't wait too long, depending on your age, ... to start long-term savings, or you lose that wonderful benefit of compound interest," she said.
However, people first should sit down with a financial expert to determine the best track for their individual situation, she said.
The Military Saves Campaign also includes a Military Children Saves initiative that is aimed at building financial responsibility in military children and youth.
"We can start planting those seeds and make it part of a skill set early on," Ms. McClelland said. "If you get a quarter, you can take a nickel and put it away. It starts them on a cycle that will reward them for the rest of their life."
Brenda McDaniel, a senior program analyst in the Pentagon's office of family policy and children and youth, suggested that parents encourage children to take at least half of their allowance and put it in savings.
Ms. McClelland said officials are working with the Department of Defense Education Activity, youth centers and child development centers to instill this financial message in military children and youth around the world.
Ms. McClelland acknowledged the additional challenges military families encounter.
These include deployments and frequent moves, which "can destroy a budget and a routine you've fallen into," she said.
"It's very, very important that we look at the impact of emergency situations and relocations and really stress that with our folks," she added.
Financial readiness is vital in the military, Ms. McClelland noted, since it's tied so closely to mission readiness as one of the pillars of personal readiness.
"If you are more secure in your personal life, you're more able to attend to the mission at hand," she said.
"If you have bill collectors calling, if you feel like you don't have enough money to do what you want for your kids, it's hard to concentrate on launching that airplane or doing whatever your job is for the mission," she said. "Our leadership has very much recognized all of the effects personal readiness has on mission accomplishment."
This recognition has led to accredited personal financial managers being in every service family center, as well as personal financial counselors who work with state and community officials as part of joint family support assistance program teams, Ms. McClelland said.
And for people who are geographically dispersed, the DOD's Military OneSource consultants can provide telephonic counseling or refer people to a counselor in a community.
Ms. McDaniel, who also is the architect of the Pentagon Military Saves Fair, encouraged people to take action today by taking the "saver pledge" on the Military Saves website, where they can pledge to save for everything from a new car to a new house.
By doing so, people may be inspired to take a closer look at their overall finances, including credit, debt and savings, she said.
"This will hopefully lead them to getting assistance from some of the (wealth of) resources we have available to them," McClelland said.
Financial management tools, such as spending and savings plans, don't vary much over the years, Ms. McClelland noted.
The goal, she said, "is reaching the point where we can get folks to value each of those tools, and how important they are to their quality of life and happiness. It just makes for a better quality of life all around."