As a former active-duty officer in the Air Force  and current reservist, I understand the unique challenges military families routinely experience.  Military families face deployments, training, and temporary-duty assignments. Add to that constant moving, endless changes to pay, and even maintaining a dual income household.  In order to gain financial independence, military members deserve a baseline of tips and a bounty of little-known financial strategies. 

Financial Tips for Military Families

1. Establish an Emergency Fund

The very first step on the road to financial wellness is establishing an emergency fund. For military families, the power of having funds set aside for the many changes in life is a priority. Having an emergency fund provides the freedom to take on the many changes that military families will encounter. 

The basement flood, leaking roof, or car accident always seem to happen during the most inopportune time.  The emergency fund helps families overcome  financially stressful times. Utilizing a savings account and a low-risk invested brokerage account are key to peace-of-mind. An example of the emergency fund would be approximately 6 – 9 months of monthly expenses in a safe, but liquid investment portfolio.

2. Find Unique Saving Opportunities

Military families have access to plenty of unique opportunities to save. The Thrift Savings Plan (TSP), for example, allows both traditional and Roth contributions – knowing which one is best for your family can help you save a lot in the long term.  Additionally, with the new Blended Retirement System, there are opportunities for matching and non-elective contributions.

The Post-9/11 GI Bill provides up to 36 months of in-state tuition for veterans or a family member, if planned correctly. A financial advisor can be hugely beneficial in supporting  Low-cost group term life-insurance through Service Member Group Life Insurance protects families while avoiding high-cost permanent life insurance policies. The Savings Deposit Program allows deployed service members to save up to $10,000 while earning 10% interest.

3. How Military Members Can Minimize Debt

Military members are trustworthy, hardworking, and most importantly, their pay is guaranteed by the government. That means that the odds you’ll get a loan while still in the service is quite high. But often, what many  people do with this unique ability to get in debt is buy a flashy car! Do not handicap yourself with high monthly car payments. Instead, establish a budget and stick to it.

Pay yourself first.  Meaning, save 10-20% of your take home pay before paying for bills and entertainment. Finally, remember it’s never too late to get out of a hole. If you’re currently  in debt, develop a plan and stick to it.  It is no different than accomplishing a mission.  

4. Buying a Home

Did you know that home ownership is lower among active-duty service-members compared to civilian peers?

Home ownership decisions have lasting effects for better or for worse. The unpredictability of moving as a member of the military makes it challenging to make sound home buying decisions. Home ownership is lower among active-duty service-members compared to civilian peers.  Building home equity can have a large impact on a family’s net worth and their ability to borrow funds at a lower rate.

The VA loan provides a unique opportunity to own a home with limited to no down payment. Understand the risks associated with being a landlord from a previous duty station. Is your emergency fund sufficient to handle this extra risk?

5. Preparing For Life After Service

Whether the next step is retirement or a transition, not taking the proper steps early can have a tremendous impact on the next phase of the military member’s life. Military families that rely solely on the pension are drastically behind civilian peers which will limit opportunities after serving.

These steps provide the initial steps for military members to earn financial independence.  As always, it is recommended to meet with a CERTIFIED FINANCIAL PLANNER™ in order to customize a plan for military families.

Military Families: Steps For Financial Success

For military families, developing a financial plan that is right for them can make a big difference in achieving long term financial security.  Just like a mission, think about your objective and be prepared for the unexpected. Here are our top 5 tips for financial planning for military families. 

1. Save 10-20% of your take home pay
2. Fully fund a 6 to 9 month emergency fund
3. Take advantage of matching opportunities with TSP or other similar programs
4. Max out your IRA or Roth IRA
5. Place any extra savings into a brokerage account