14 Financial Planning Tips for the Military

Financial planning might seem like a luxury for the wealthy, but anyone can benefit from making plans for their money, especially those who are struggling to get by.

As a servicemember or veteran, you have access to special perks to help you build a solid financial plan. They include an array of benefits and  military financial advisors. Here are a few ways to get started with financial planning for military personnel:

1. Create a Budget

For many people, the idea of creating a budget is scary and uncomfortable.

That’s because a budget might seem like a plan to eliminate fun from your life or serve as a reminder of your financial mistakes.

In reality, a budget is more like a roadmap. It helps you decide how you’ll go about achieving a specific goal, like paying off credit card debt or buying a house. Here are a few ways to keep it simple:

1. Just get started: You can start with an Excel sheet, a budgeting app or even a piece of paper. It doesn’t have to be perfect in order to be useful, and you can improve your system later.
2. Make a list: A budget is really just a list that compares your monthly income to your expenses. Not sure how much you’re earning and spending? Look at your pay stubs, bank transactions and credit card statements to find out.
3. Look for items you can reduce: Look at your list to see what you can change. If you’re not sure, review each item and ask yourself these questions, starting with the biggest expense first:
   • Am I getting the best price available?
   • Is there financial assistance to help me cover this cost?
   • Can I cut, cancel or unsubscribe from this service/expense?
   • Can I go without this expense temporarily or even permanently?
   • Is this item meeting a need or adding value to my life?
4. Brainstorm ways to increase income:  Cutting costs isn’t the only way to improve your budget. Take a look at your incoming funds and  ask yourself:
   • Do I have an opportunity to bring in more income temporarily or permanently?
   • What can I sell or rent out in order to bring in extra cash?
   • How can I increase my income each year?
   • Can I apply for financial assistance or benefits?

Finally, ask yourself how long will it take to reach your goal. If the time frame is too long, consider making more adjustments or seeking professional help (more on this below).

2. Sign Up for Life Insurance

Not everyone needs life insurance, but it’s highly recommended for people who have dependents.

You don’t have to shell out a ton of money to get coverage, but carrying life insurance gives your family some assurance of financial stability after you’re gone.

Consider one of these options for life insurance for active-duty servicemembers and veterans:

• Servicemembers Group Life Insurance (SGLI). Through SGLI, the Department of Veterans Affairs automatically signs you up for term life insurance coverage during your service, with premiums starting as low as $4 per month.
• Veterans Group Life Insurance (VGLI). You can get life insurance through VGLI if you apply within 1 year and 120 days of leaving the military. Plans start for less than $1 a month, but you can also get a $400,000 policy starting as low as $28 a month.

3. Fund Emergency and Savings Accounts

Having an emergency fund can help you turn a crisis into a breeze.

Whether it’s a car repair or a medical bill, your savings can help you cover the occasional set-back, without resorting to credit cards and high-interest loans.

How much should you save? Many experts recommend three to six months’ worth of your living expenses.

If that seems impossible, start smaller. A great goal is to save one month’s worth of your rent or mortgage, that way you’ll have shelter covered in a worst-case scenario.

It might take a while to reach your goal, but you can get there by setting up an automatic deposit as small as $20 a month, or even less, into your savings account.

If you’re serving in a combat zone, look into the Department of Defense’s Savings Deposit Program, which gives you a whopping 10% interest on your deposits.

4. Maximize Education Benefits

Military education benefits are some of the best perks available for servicemembers, veterans and their families. Here are some options to consider:

• The GI Bill. The GI Bill can give you and your family money to cover tuition for college, graduate school or training, plus it can cover tutors and other fees related to education.
• Military Tuition Assistance (MTA). The DoD offers military tuition assistance programs to help pay for certain voluntary off-duty degree and certificate programs.
• Student Loan Relief. Your service could qualify you for federal student loan forgiveness or other student debt relief. Check out the Public Service Loan Forgiveness (PSLF) program and other relief options at StudentAid.gov.

You may also be able to get college credit for your military service if you reach out to your school and transfer your education benefits.

5. Take Advantage of Military Tax Breaks

Your affiliation with the military can help you reduce your tax bill. Military tax breaks may be available for current and past members of many organizations, including:

• U.S. Armed Forces and reserves
• Uniformed services
• Civilian employees and contractors
• Support organizations like the Red Cross

Tax benefits vary depending on your service, but they may include an extension on your tax bill or an exclusion of certain income from taxes. You can learn more at IRS.gov.

6. Enroll in Military Medical Benefits Plans

Medical coverage can be really expensive, but the military offers help for you and your family to cover the cost.

The DoD’s TRICARE plans include health insurance, dental insurance and prescription drug coverage for services at military care facilities and through certain civilian medical providers.

Multiple TRICARE plans are available. Some plans require you to pay a premium, but active- duty service members and their dependents can get care with no out-of-pocket costs.

Learn more and apply at TRICARE.mil.

7. Use Your Housing Benefits

A great way to cut your expenses is to take advantage of military housing assistance. Here are some options at various stages of service:

• Basic Allowance for Housing (BAH): The DoD offers a basic allowance for housing for uniformed service members in the U.S., based on local housing costs.
• Overseas Housing Allowance (OHA): The OHA provides financial assistance for housing expenses for uniformed service members stationed overseas.
• Family Separation Allowance (FSA): If you’re separated from your family because of where you’re stationed, the FSA can cover up to $250 per month in expenses caused by the separation.
• Dislocation Allowance (DLA): The DLA gives you partial reimbursement for expenses related to a permanent change of station.

8. Look Into VA Loans When Buying a Home

Home buying might seem like an impossible dream, but the VA can help make it affordable.

VA loans give you a chance to buy a home with less money up-front and with fewer expenses over time. Depending on the loan program you choose, you may not need a down payment, you may not have to pay for private mortgage insurance (PMI) and you can get access to lower interest rates and closing costs.

VA loans are also available for homeowners who want to pay for home renovations or refinance their current mortgage.

9. Use Child-Care Benefits

The majority of U.S. families are now paying more than $10,000 a year for child care. That means your military child-care benefits could help cut one of your biggest expenses.

Military child-care support is available worldwide. It includes:

• Military-Operated Child-Care Programs.:Free care at accredited, facility-based programs or child-care providers.
• Military Child Care in Your Neighborhood (MCCYN): Assistance paying for child care in your community.
• Child Care in Your Home (CCYH): Financial help for full-time child care in your home.

10. Make Use of Job Assistance Programs for Military Spouses

If your spouse needs a job, the military can help. Military spouse education benefits and resources include these extensive programs:

• The DoD’s Spouse Education and Career Opportunities program, which includes free career coaching packages.
• Targeted recruitment and career opportunities through the Military Spouse Employment Partnership Career Center.
• Free through the Department of Labor’s (DOL) free Transition Employment Assistance for Military Spouses (TEAMS)
• The My Career Advancement Account Scholarship Program, which provides up to $4,000 for military spouses to pursue professional licenses, certifications, or associate degrees.

11. Optimize Military Retirement Benefits

The military can offer you financial support for the rest of your life, through its various retirement benefits. Depending on when you joined the military, you may be eligible for one of the following plans:

• Legacy High-3 System: If you joined before 2018, you can use the High-3 system to get a monthly annuity for life after you complete 20 years of service.
• Blended Retirement System (BRS): Through the blended retirement system you get a monthly annuity for life after 20 years of service. The BRS also makes matching contributions to Thrift Savings Plans. Anyone who joined the service after 2017 is automatically enrolled.

You may have access to additional benefits in retirement, so make sure you follow our military retirement checklist to see what’s available.

12. Use Veteran Transition Programs

Transitioning out of the military comes with a unique set of financial challenges. Fortunately, you can use military resources to make it easier.

The VA’s Transition Assistance Program (TAP) can help you understand the various benefits available to you and your spouse, including career coaching and free advice for transitioning veterans. Each branch of the military also has special programs to help you prepare for the transition to civilian life.

13. Avoid Financial Scams

Military members and veterans are frequent targets of financial scams.

Scammers often trick their targets by posing as government representatives while offering fake financial help. By pretending to be an employee of a trusted organization, like the VA or DoD, criminals have an easier time getting you to share personal and financial information.

How do you avoid scams? The best way to be safe is to go directly to the source. If you get a call, a text message, DM or an email about financial assistance, don’t click on any links or answer any questions. Instead, look up the information on your own, through a .gov or .mil website, or by calling a verifiable phone number.

14. Use Your Resources

Being in the military can give you a huge network of support and resources. Instead of suffering through money-related challenges on your own, let your network help.

A financial counselor at Military OneSource can offer you guidance, give you advice on dealing with credit and debt, and help you navigate your military benefits. Their services are free and you can complete an appointment in person or over the phone.

There are also countless veterans associations and nonprofits, like the American Legion and relief societies, that offer financial support to individuals and families in need with grants and other funds available for members of specific branches of the military.