A penny saved is military smart...if your bank accounts are working as hard as they can to bolster your military lifestyle. Banks offer a veritable smorgasbord of bank products and services. It's up to you to find those that support your military expenses, lifestyle and future plans.
Some sound financial advice for balanced military money management: keep three months worth of living expenses to cover your military family in an easily-accessible bank savings account, checking account, or a high-yield money-market account. If you have kids or rely on one income, make it six months worth. Military families that maintain strong savings accounts are less likely to fall prey to short-term payday loans with high interest rates and huge credit risks.
As a rule, ten percent of your annual military salary should be saved for your military retirement - but the older you are when you start saving, the more money you'll need to save. If you start your savings account at age 50, you may need to save 30% of your military salary per year, or more. You can see why the best bank could be the one that pays the highest interest on your savings accounts. It should also facilitate direct deposit of an allocated savings amount, making saving part of each military paycheck an automatic habit.
MILITARY SAVINGS DEPOSIT PROGRAM
Here's a nice military perk that should be of high interest: the military Savings Deposit Program allows active military in a combat zone to contribute up to $10,000 at a guaranteed 10 percent annual interest rate. Wow!
When it comes to straight savings, banks typically offer two kinds of savings accounts: Passbook and Statement Savings Accounts. Savings Accounts generally pay lower interest rates than money market accounts or CDs. Passbook Savings offer a low interest rate and may charge minimum balance fees. With Statement Savings, instead of a booklet, your bank mails you a statement documenting all of your transactions, on a monthly or quarterly basis. Statement Savings accounts also charge minimum balance fees.
Allow your money more time to grow - the gains on your invested savings will build on the prior year's gains. That's the power of compounding, and it's the best way to accumulate wealth towards your military retirement.
Most checking accounts are pretty basic - limited services, for a small price. You might prefer an interest-bearing checking account that pays interest and offers unlimited check writing privileges as long as you comply with requirements. Asset Management Accounts are another checking account option, offered by brokerages and banks, with the convenience of one account to take care of all your banking and investment needs including check-writing and a comprehensive end-of-year statement that documents all of your transactions.
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