5 Ways Federal Agents Win With Money

Here are 5 ways Federal Agents win with money – without having to make the associated mistakes.

Why in the world would someone – especially a Financial Advisor – admit to having made a mistake with money? Much less multiple mistakes. Well for starters, I’m pretty far down the road when it comes to caring what anyone thinks about (insert what you wish here) what I drive, where I live, how much I make etc. I learned long ago that my net-worth has never equaled my self-worth.

So beyond that, why would I belly up to the coffee bar to write an article on my failures? The first reason is because there truly are 5 ways Federal Agents can win with money. The second reason, and likely the most important, is because other Federal Agents like you can benefit from my mistakes. And that’s important because my focus is to guide you in winning with money. Thus, YOU are important.

Now let’s step back in time for a second. During the academy, we watch, scrutinize, evaluate, role-play and analyze various ways to survive stressful encounters. When things go sideways we want muscle memory and training to kick in. And we want that to happen within the shortest possible time frame so that we can avoid a negative outcome (i.e., getting hurt or seriously injured). We review scenarios over and over.

Part of our learning process is understanding why someone else failed and how we can do better if we are faced with the same or a similar situation. For example, we’ve all watched a training video in which an Officer or Agent is perhaps too lackadaisical in approaching a suspect. The suspect senses this and acts out accordingly. Within seconds we have a big mess. We all train by humbly analyzing what may have gone wrong. We empathize with the Agent because that could have been us. We try to level up our tactics to avoid the situation if we ever encounter it.

However, we don’t need to get shot or stabbed to know that it probably hurts. We get that it can ruin our day in a hurry. Also, no need to get punched in the nose (that hurts too!) to learn a lesson. We understand that it’s far more effective to enhance our verbal judo skills and talk our way out of a bad spot. Why go hands on with a suspect if we don’t have to?

In much the same way, you don’t have to feel the pain of certain financial mistakes to understand that you should avoid them. Certainly some of the best learning comes from experiencing the natural outcomes of our mistakes. But we don’t need that for all types of learning. Don’t forget, there are some financial moves that you can’t come back from. 

For example, what if you don’t save a dime in your Thrift Savings Plan (TSP) for 20 years? Then by year 21 you will have just learned that it’s really hard to retire! However, you can’t go back and undo your mistake. It’s just too big. But you can clearly understand from someone else’s mistake. Through story-telling we can learn that saving for retirement via your TSP is a good thing. And it’s not a mistake YOU want to make.

“But Charlie, aren’t you nervous about admitting financial mistakes”? Oh, come on. We all make mistakes. The best lessons come from our mistakes. Carl Richards calls them the “crunchy bits”. The good stuff. So, not really. I may be a little embarrassed on the one hand, but you’ll get a TON of VALUE from my mistakes on the other hand. That’s a trade-off I’ll make all day long.

So if your current financial professional or anyone else you’ve hired to provide a service tells you they’ve never made a mistake or won’t admit to their own mistakes, then you don’t even have to honor them with a phone call. You can fire them over text if you wish. The only one who doesn’t make a mistake is the big guy up above (This is usually where my Dad chimes in and says, “no I’ve made mistakes before son”). Questionably-funny Dad jokes aside, here’s the bottom line. We all make mistakes and that is usually where the best learning happens.

So let’s get on with my list of failures and the 5 ways that Federal Agents win with money!

Epic fail for me here. I won’t go into the grand details of an HSA. It’s beyond the scope of this paper (we’ll do another paper on the HSA, no worries). Suffice it to say, even as embedded in the world of finance as I have been, I didn’t grasp the tremendous value of a HSA. This was particularly true early in my federal career. This was a mistake that likely cost me tens of thousands of dollars.

Now there is something called a Flexible Spending Account (FSA). Don’t confuse the FSA with it’s more powerful big brother, the HSA. The FSA is a cute, fluffy toy compared to the earth-shifting benefit that the HSA can have on your life. Think of the FSA as a 10-horsepower scooter on the highway of life. While the HSA is a 900-horsepower, weapon-laden, Batmobile-esque tax crushing machine.

But I digress a bit. The point is a HSA is a great investment vehicle for you to consider. In short, it has triple tax benefits. It can be tax deductible when you contribute, thereby lowering your current income. It grows tax-deferred, meaning you don’t pay taxes as the account grows over time. And it can be withdrawn tax-free, if used for eligible medical expenses. Bang, Bang, Bang! A potential win for you and yours all day long. Some plans even contribute to your account – almost like a matching contribution (ex. Aetna provides about $133 per month as a contribution to your HSA).

The caveat to watch for is that in order to have a HSA, you must also have a High-Deductible Health Plan (HDHP). Nothing wrong with a HDHP. It’s just a caution that you may spend a bit more for out-of-pocket health related costs. So you just have to ensure your cash flow is comfortably positive.

During our analysis, we also found that the overall cost of a High-Deductible Health Plan with a HSA was often lower than a traditional medical plan (PPO or HMO) when all the dust settled (i.e., after we accounted for the healthcare premiums, co-pays and deductibles associated to the non-HSA plans). Of course, do your own analysis. But, the idea is to first contribute to the HSA. Second, pay as much of the out-of-pocket medical costs as you can from current cash flow (i.e., your paychecks and other sources of income). Third, let that HSA grow and grow. You want to use it in retirement to pay for medical expenses. This is the reason why the HSA is sometimes referred to as a Medical IRA. Definitely look more into the HSA. There is a reason it’s #1 on our list of 5 ways Federal Agents win with money!

This one is not for you. It’s for your family. Too often we think of estate planning as something we do for ourselves. Unfortunately, this makes it a bit easier to neglect. It’s actually something we do for our family. In a time of grieving (i.e., we’ve met our untimely demise) they don’t have to worry about cleaning up the financial mess.

Your loved ones will have enough to deal with – funerals, mourning, shifts in home life, cleaning out, employment decisions etc. The list goes on. The last thing we want is to burden them with a giant heap of tangled finances and hard to find passwords that further frustrate them. Instead, it’s an ideal time for us to send the message, albeit from the great beyond, that we loved them enough to set up a plan for them.

When I first entered federal service, I went years without an estate plan. I don’t beat myself up over it too much. I didn’t know what I didn’t know. For a long portion of my career I was single. I just thought estate planning wouldn’t matter anyway. I didn’t realize that whether you are single or married, you are likely leaving behind financial matters that others have to organize. Whether these “others” are your spouse, children, parents, siblings or the state in which you live, someone will be handling your affairs.

You are responsible enough to put together an arrest or search warrant plan. Guess what? That means you are capable of getting your estate planning documents together. And you should! 

As Federal Agents, we don’t deliver flowers for a living. The work can often be dangerous and the odds that you could be seriously hurt or injured are real. So please don’t make the mistake that I made. Don’t walk around without a basic estate plan.

Armor up and take it upon yourself to protect your loved ones. You are doing this for them. They will need you to have thought of this in advance. I’m not an attorney, and I don’t play one in newsletters, but here is a touch of education on basic estate planning documents, which may include:

• Will – helps control the distribution of your property at your death.
• Side Letters of Instruction – helps outline the distribution of specific possessions and delineates some of your burial and funeral wishes.
• Power of Attorney – allows someone to act on your behalf in case you are unable to make decisions for yourself; usually about property or finances.
• Durable Power of Attorney for Health Care – allows someone to act on your behalf in case you are unable to make medical decisions for yourself.
• Living Will (Advance Medical Directive) – helps delineate your last wishes regarding the sustainment of your life under certain circumstances.
•  Revocable Trusts – helps to pass on your assets according to your wishes and in a private manner.

A good financial advisor will act as your quarterback for estate planning. They’ll teach you the basics of estate planning and assist you in getting your documents crafted by a qualified attorney. You’ve got this!

You get a 5% match on your Thrift Saving Plan contributions. Most of you should be contributing more than this. I do understand that some Federal Agents in a high cost-of-living area that are just starting out may have difficulty getting to 5%. However, the overall savings rate that you should be shooting for is roughly 15% to 25% (or more depending on your goals).

First, it’s ok to be below these numbers. But you must be willing to inch your way toward the 5% match…and then the 15%…and then up from there. Keep in mind this 15%-25% rule of thumb is for your TOTAL savings. Everything. It’s what you put into your TSP, any brokerage accounts, a savings account, extra mortgage payments, etc. For the TSP, you really want to hit that 5% minimum as soon as you can. Remember, you’re getting a government match when you do 5%. That match is essentially free money. A true 100% return on your investment!

One other thing with the TSP, at least at a high level. Make sure you are stashing away a DOLLAR AMOUNT each month. Not a percentage. Your matching occurs on a bi-weekly basis (when you get your paycheck). So it is possible that if you contribute a percentage toward the TSP and you are highly compensated, you could “accidentally” hit your max contribution sometime in the Fall. Meaning, you may go a few pay periods, each year, without getting a TSP match. Don’t do this.

Contribute a flat dollar amount each month. Get that TSP match if full. For 2025, the most you can contribute to your TSP is $23,500 (if you’re under 50). You can contribute an additional $7,500 as a Catch Up Contribution (if you are 50 or older). Turn this into a dollar amount by dividing your number by the number of pay periods you’ll get for the year. This will help ensure that you are taking what the “G” is offering. A 100% return!

The 5 ways Federal Agents win with money would not be complete without this one. Feds love real estate. Now rental properties are considered passive income by the IRS. Yikes. Careful here. What do I think of when someone says the word “passive”? I think about floating in a pool with an adult beverage and no responsibilities for at least the next 120 minutes. Don’t confuse the IRS definition of “passive” with rental properties. The actual amount of work you will have to do when you go into the rental property business is staggering.

Over the past 20 years or so I’ve had at least one or more rental properties at any given time. I liked the work so I took the hits (you know like getting called on a Friday night at 8 o’clock to fix a leaking toilet – after you’ve already worked a 10-hour day chasing bad guys). But understand that while real estate can be a great hedge against inflation and provide some tax benefits and some current income, you will not be a landlord from the sofa while watching Braveheart for the 42nd time. You’ll be putting in some hours and cash to make it work. Strap in!

5 ways Federal Agents win with money ends with financial peace. Turn off Tik Tok, the “Insta” and the rest of the nonsense. Most of it features a 19-year-old spouting off crazy financial schemes while steering a Ferrari with his knees because he is oh so busy checking his bank account with one hand and sipping a spritzer with the other hand. He isn’t wealthy.

Most likely he’s as broke as Monday is long. Find a few trusted professionals that care about you and who will guide you in the right direction. A good financial advisor will TEACH you about the pros and cons of various financial fundamentals, strategies and behaviors. They’ll do so because they want you to win with money. A trusted guide next to you also understands that the definition of “win” is very personal. A quality financial partner will help you figure out what’s really important to you. Then they’ll help you align your life with those very personal and very important values. Live differently. Learn to tune out the noise!