Budgeting Tips for Military Families

When you enlisted in the military, you probably didn’t think about how much it would cost you to serve… at least not in terms of dollars and cents. It can take time to realize that your service has an impact on your finances, and unfortunately, it can bring on financial instability.

Active-duty service members report that some of their biggest concerns are related to money, including income, housing and childcare costs. That’s because managing money is hard enough as a civilian, but during your service, you might have to grapple with the added pressures of limited income, frequent changes to your pay and relocations. So you’ll need to have a budget for your family, and you may need to revisit and adjust it on a regular basis.

1. Know Your Military Pay and Benefits

As a service member, you might receive several types of pay at a time. For each type of pay, you need to know whether or not it’s taxable and when and how the amount can change. At minimum, pay amounts automatically adjust at the start of each year, but they may also change when you move locations or change rank.

When it comes to your earnings as an active-duty servicemember, Basic Pay will always be part of the picture. How much Basic Pay will you earn? The monthly amount is based on your rank and years of service. In 2024, enlisted service members with E-1 pay grades received $2,017.20 per month ($24,206.40 a year, before taxes) in basic pay.

As for other financial benefits — such as special and incentive pays and allowances — eligibility is based on your situation. Here’s a look at some of the most common types of pay you might receive:

To see a breakdown of what you’re earning, use the MyPay tool to look at your monthly Leave and Earnings Statement (LES).

2. Create a Family Budget

A budget doesn’t have to involve complex math. It’s simply a comparison of your income to your living expenses (see a template here). If your expenses outweigh your income or you’re not progressing toward financial goals, you can look at each item and make adjustments.

But when you’re on active duty, your income and living expenses can change a lot, which means your budget needs frequent tweaks too. Here a few tips for making sure your family’s budget works throughout your service:

• Be proactive: Create calendar reminders for upcoming pay changes. Before the change takes effect, decide how you’ll adjust your budget and discuss the changes with your household.
• Be consistent: Revisit your budget on a regular basis. Set a monthly date and time to review what’s working and what isn’t.
• Be curious: Ask around for guidance from people who have more experience. See if they can share resources and tips on how to prepare for upcoming changes.
• Be conservative: Don’t plan to spend every dollar. Whenever possible, build savings into your budget. Then, make sure you really save by setting up an automatic contribution to your savings account.

3. Manage Frequent Relocations Effectively

Relocating can bring a lot of financial changes, and you may have to relocate often while you’re on active duty.

Unfortunately, this can mean big disruptions in your budget. “It is common to see your total pay decrease after moving from a high-cost to a low-cost area,” says Admiral Brian Luther, president and CEO at Navy Mutual.

Here are some of the major expenses to anticipate in advance of a move, and resources to help you reduce them:

• Changes in your BAH: The BAH rate is calculated using local rent and average utility costs. So Admiral Luther says, “It is important to have that information on hand when selecting a house in a new duty station so you do not rent a house that will cost more than your BAH will cover.” You can visit the Defense Travel Management Office to look up BAH rates.
• Moving and storage: Contact your local Relocation Assistance Program to see what help they offer with shipping and other costs.There’s also special assistance available if it’s your final move.
• Temporary housing: Get reimbursed for up to $290 per day, for up to 14 days for meals and lodging expenses through the Temporary Lodging Expense (TLE) Other move-related allowances might be available too.
• Spousal employment gap: Look for remote work opportunities or use a job search tool meant for military spouses.
• New childcare arrangements: Look into the wide variety of childcare programs, through the military’s Child Development Centers and Family Care Centers. Check into fee assistance through Child Care in Your Home (CCYH) or Childcare Aware of America.

To find resources for all installations, Admiral Luther recommends checking out MilitaryOneSource.mil. You can also check to see if your Military Relief Society offers help for relocation or other financial needs.

4. Utilize Military Discounts and Resources

As a service member, you can tap into discounts to reduce nearly every expense you have. Before making a purchase or adding a new expense to your budget, check to see if your service qualifies you for a lower price. Here are some of the many companies that offer special deals:

• 15% On-Base Discount on auto insurance from USAA (which is already one of the most affordable insurers)
• 20% off and free shipping for online purchases from CVS.com
• 25% off shoes at Asics
• 25% off certain commissary items through Your Everyday Savings
• Up to 35% off car rentals through Avis and Budget
• 40% off certain family plans at T-Mobile

5. Save for Emergencies and the Future

No matter how thorough your budget is, there will be unexpected expenses. That’s why, whether you’re in the military or not, experts always recommend saving money for emergencies.

Even if you start by automatically depositing a small amount into a savings account each month, let’s say just $50, you can earn interest on your deposits and have some cash available for things like car repairs. At 3% in interest — which you might get with an online savings account — your $50 a month deposit turns into just over $608 in savings in one year.

If you’re in a designated combat zone, however, you might have the option to deposit up to $10,000 a year through the DOD’s Savings Deposit Program (SDP), and you’ll earn an impressive 10% interest on your savings. By comparison, the average savings account earns just 0.45%.

For retirement savings, the military offers a few options. You need at least 20 years of service to qualify for military pension plans, and you might qualify for an annuity or retired military pay depending on your retirement benefit package.

But anyone who’s serving can contribute to a Thrift Savings Plan (TSP). Like 401(k)s you contribute through deductions from your pay, and the amount you receive in retirement depends on how much you contribute.

As an added benefit, if you have FERS or BRS, your agency or service will automatically contribute 1% of your basic pay each month. And if you add to the account, they’ll match your contribution up to 5% of your pay. In other words, they’ll put free money in your retirement savings account.

While TSPs help you prepare for retirement, they can also help you in the short-term, in the following ways:

• If you choose a Traditional instead of a Roth TSP, you can reduce your taxable income (note that taxes will be due when you withdraw the funds).
• You might qualify for the IRS’s Retirement Savings Contributions Credit, which gives you a credit equal to 10%-50% of your contribution.

Keep in mind there can be major penalties for an early withdrawal, so a TSP is not a good place to keep your emergency savings.

6. Manage Debt

Between a limited income, inflation and frequent moves, it can be hard to cover all of your expenses during service. That might explain why military families are more likely to be in credit card debt than civilians, and they’re more often targeted by financial scammers.

“Military communities are vulnerable to financial fraud and scams,” says Admiral Luther. “Many unscrupulous companies parade as ‘military friendly’ or offer to provide ‘financial education’ when in reality they are trying to sell service members products that they don’t need.

“To avoid this, more service members should use the financial services offered on bases or make sure they are working with organizations that have been vetted as military friendly and unbiased, educational resources,” he advises.

Whether you’re dealing with credit cards, personal loans, student debt or an overdue VA mortgage payment, you can use your military benefits to get free professional help.

“Not enough people utilize the free accredited financial counselors available on installations and through Military One Source,” says Admiral Luther. “Also, the Office of Financial Readiness has tremendous resources on their website Finred.USALearning.gov.” You can visit that site to find a financial counselor.

These other resources might help you during your debt-payoff journey too:

• Sen$e mobile app for servicemembers and their families.
• The Servicemembers Civil Relief Act (SCRA) which requires creditors to reduce the interest rate to 6% on debt you took out before active duty.
• The Military Lending Act which stops lenders from charging you more than 36% interest.

7. Plan for Deployment

Planning for deployment can be emotional and stressful. To make sure you’re financially prepared, you’ll need to do some organizing. The DoD recommends taking these steps to get ready:

1. Calculate how much you’ll earn from pay and allotments. You may be adding Special and Incentive pay, tax-exempt combat pay and/or the Family Separation Allowance to your earnings.
2. Update your budget. Look to see what expenses need to be canceled and if anything needs to be cut back. If you’ll be earning more, make a strategic decision about where you want to put the money. For example, you can deposit extra cash through the Savings Deposit Program to earn 10% interest on your savings. Keep taxes in mind as you consider your changing sources of income.
3. Create or update legal documents. Make sure your beneficiary designations, will and Record of Emergency Data are up-to-date. You can get help with this step through the Armed Forces Legal Services Locator.
4. Utilize your SCRA protections to reduce your interest rates to a maximum of 6% on debt, and to prevent creditors from trying to collect overdue debt.
5. Get financial support if needed. This can include financial counseling through Military OneSource, assistance through the Red Cross or help from your military relief organization.

8. Take Advantage of Education Benefits

One of the best ways the military rewards you, your survivors and your dependents is through education benefits. These benefits can be especially important to take advantage of when you’re transitioning back into civilian life and looking for a way to increase your future income.

There’s a long list of education benefits you might be eligible for, including:

• GI Bill: There are various GI Bills that can pay for several years of education expenses.
• Military Tuition Assistance (TA): Covers up to $4,500 a year in tuition for education or job training.
• Yellow Ribbon Program: Educational institutions can cover tuition and fees that aren’t covered by the VA.
• Scholarships: There are various scholarships and grants that you, your spouse and children can use to cover the cost of schooling.

Financial Success as a Military Family

When you’re in the military, financial wellness doesn’t happen by accident. It takes careful planning to spend within a restricted budget and adapt to frequent changes. You’ll be in the best position to manage money challenges if you stay proactive and use the many resources you have at your disposal. For many service members, that might include financial counseling.