Plebe-Parent Weekend at the United States Military Academy at West Point begins this Friday, March 14. It’s one of the most important dates of the year for first year cadets – or plebes as they’re called at the academy. It’s essentially the only time during their tenure that plebes will be able to serve in leadership roles without the upper-classes present. It’s also the only time that a plebes’ parents will be able to tour the grounds.
As a Financial Advisor, I often wish I could spend some quality time with these impressive young cadets and emphasize to them just how much time is on their side – how a modest savings account begun now could lay the foundation for a lifetime of financial peace and the ability to retire on their own terms.
Of course, that’s easy for me to say.
Unfortunately, even the best and brightest among us are susceptible to the lure of immediate gratification. We are seduced by shortcuts. And we are all vulnerable to emotions that persuade us to buy when we should sell, and sell when we should buy – even cadets at the world’s most prestigious military academy.
Human nature does us no favors in our efforts to achieve our long-term financial goals. We are, by nature, mere mortals. And, all of these perfectly normal human tendencies contribute directly to the procrastination and poor decision-making that too often undermine our pursuit of financial security. Our own First Command Financial Behaviors Index® finds that just 38 percent of middle-class military families feel confident in their ability to retire comfortably[i].
That’s why First Command is committed to the mission of coaching those who serve in productive financial behaviors that contribute to financial security. And, the key to success is to be developing productive, positive financial behaviors. The sooner you begin, the easier it will be to continue building upon the foundation as you grow, start a family, and eventually retire.
Even if you’re not a plebe at West Point, or the parent of one, the same principles to financial security exist. So, here are a few basic – but very important – tips for any college age person with higher financial aspirations:
Write your goals down on paper and create a budget that gets you there. Time can be a friend or foe. It’s your call. If you start now, the simple practice of budgeting will help you immensely to keep your spending in line. Once you know where your money is going, you can set a realistic budget based on weekly or monthly obligations.
Avoid the debt trap. By making a commitment to financial freedom when you’re young, you can get a significant head-start on your life savings. This sounds simple, but young adults can be the most susceptible to credit card marketers. Remember, items purchased with credit cards can end up costing much more than the ticket price if interest charges are allowed to accrue.
Plan ahead for large expenses. Take time to evaluate the large purchases or investments you plan to make in the years ahead. If you’re planning to purchase a car for instance, create a timeline and determine how much you plan to spend – and be realistic. You may consider a separate account for each goal; this can help you keep track of their individual progress. Plus, a road trip with friends can be much more rewarding if you’ve saved up and can travel without going into debt.
Invest in your future. Take advantage of opportunities to save and invest for retirement, through an employer-sponsored program or IRA, or through the Thrift Savings Plan for those who serve in the military. Also, set aside a percentage of each paycheck to build your emergency fund.
While it’s impossible to impart every bit of financial wisdom in one blog post, I hope this will reinforce the notion that financial responsibility should begin as early as possible. If you haven’t started by now, it’s time to prepare yourself – and your finances – for a more promising financial future.
Matt Wineriter graduated from West Point in 1995 and leads First Command’s Financial Advisor teams in New England and eastern New York.