SCHRIEVER AIR FORCE BASE, Colo.-- --
Financial management is key to achieving stability, and with 78 percent of American’s living paycheck-to-paycheck, many are trapped in a cycle of financial dependence - Schriever Airmen included.
Col. Brian Kehl, commander of the 50th Mission Support Group, wishes to break this cycle, helping Airmen prosper over the course of their career.
With a Doctorate of Philosophy in Economics, Kehl knows his way around a dollar. Obtaining an accounting undergraduate degree in college, Kehl was a numbers person, his passion fixated towards finance after overhearing a radio show sharing financial advice. He would go on to provide financial counseling himself, whether one-on-one or for groups of Airmen, such as the company grade officer financial management class Feb. 6.
His golden rule for succeeding financially in life - live on less than you make.
“This the biggest tip I can give you,” Kehl said. “Live by it at least monthly, if not every day and every week. You can do that by making sure you understand how much you have coming in and going out, and to do that, you need a budget.”
Kehl explained maintaining a budget is crucial for reaching a better understanding of one’s financial situation. Without a calculated budget, one tends to do the math in their head, leading to surprise revelations once it is transcribed to paper.
“You have to do a budget, otherwise you truly don’t know where your money is going,” he said. “For example, when I ask people ‘how much are you spending eating out (each month)’, the answer is always less than $100. Then we would track it and find it is often over $300 dollars - you may have a vision in your head on what you are spending, but it is often inaccurate.”
Kehl cited his own experience as a young officer with a limited budget and shared techniques for those starting out, such as keeping your budget plan on your fridge for all family members to see (being one of the most visited places in a house) and maintaining a $1,000 emergency fund.
“The reason for a $1,000 emergency fund is that most emergencies are $1,000 or less,” he said. “Such as if your car breaks down, heater breaks down, or you have to buy an airplane ticket last minute. If you ever have to dip into the emergency fund, you want to bring it back up as soon as you can.”
There’s a psychological aspect to smart-spending as well. Keeping a budget out in the open in a frequently visited place can remind people of their spending limitations. For those who struggle with impulse buying, Kehl advocates using the “48-hour” rule: If you see something you want, but do not need, wait two days, talk it out with those who share your budget and see if you still desire to buy the product after the allotted time.
“It’s best to think about it and reevaluate,” Kehl said. “Most of the time, you no longer want it 48-hours later because you’ve taken the impulse out of buying.”
Additionally, Kehl said using cash for large purchases helps individuals fully understand the gravity of what they are buying; counting each and every dollar as opposed to the impersonal routine of using credit and debit cards.
“A credit or debit card transaction is the exact same movements, swiping or inserting the card and hitting ‘yes, I agree to the amount’ and signing - whether it’s less than a dollar for a candy bar or a $300 purchase,” he said. “With cash it’s much more personal – when you have to count it out and think about it, when you smell the money and feel the money, it gives you a different sense of value.”
For investing, it often comes down to risk and reward. Kehl said it is important for Airmen to be financially stable before thinking about serious investments, such as mutual funds.
“There are thousands and thousands of mutual funds out there,” Kehl said. “Look for something that’s been around for a long time, 10-plus years, and has made somewhere between 8 to 12 percent over that timeframe.”
Rewards will not be immediate, as often times the key to reaching financial success is exercising patience. In general, the earlier one starts investing and controlling their finances, the better the payoff is down the line.
Restraint is another key factor. Many do not have the luxury of being able to buy everything they want, but through proper budgeting, they can allot a certain amount of spending money each month, an amount that can grow.
Kehl, who drives a 2004 Chrysler PT Cruiser with 141,000 miles on it to work every day, says the smartest spenders are often the ones who are not afraid of what others think.
“Don’t worry about what the neighbors think,” he said. “There will come a point in time were you’ve done so well saving and investing you can walk into the store and see that $1,500 dollar television you want and pay cash for it on the spot.”
For younger service members such as 2nd Lt. Lucas Hash, program manager, 50th Space Wing Program Management Directorate, who attended Kehl’s financial management class, Kehl’s advice to start saving early and upholding patience and restraint resonated with him.
“It’s important to be reminded that investing is a long-term endeavor, so there isn’t much point in panicking when the markets are volatile like they are right now,” he said. “I thought his (Kehl’s) advice regarding having a budget that keeps you focused on your financial goals, but still allows for smart spending on things you enjoy, is critical to being financially happy.”
Kehl said he enjoys helping people with their finances and sharing his advice, especially to the military community.
“One of the reasons I started sharing generic financial advice with Airmen is that even if their pay is generally more stable, many are still living paycheck-to-paycheck,” he said. “My goal is to encourage Airmen to live on less than they make so they can be financially independent. If you live within your means and you invest over time, you’ll be fine financially.”