As a new military spouse, I would often talk about some of the challenges we faced with my family and friends. One of my least favorite responses was, “Well, you knew what you were getting into.” While my husband was already in the Navy before we met, it’s not completely true that I ‘knew what I was getting into.’ I had NO idea what the future would look like and the challenges we would face. The day my new groom reported back from our honeymoon, he was notified that he, along with his new bride, would be going to sea duty in Florida—we were in Texas, had only a month to report, and I hadn’t even received my military ID!
We would learn our first financial lesson during that move. After the movers came to pack up our apartment, we loaded our two vehicles and drove them from Texas to Florida to drop off my truck, scout out housing, and then head to Virginia for shipboard firefighting school. During our house hunting in Jacksonville, we found a cute little townhouse with pretty low rent, so we put a deposit on it so that we could move in quickly when we returned. When we returned to Florida and saw the unit they would give us, it was nothing like the model they had shown us. It had tired old avocado appliances, outdated fixtures, and grimy carpet with an odor somewhere between stale cigarettes and a sweaty dog. Needless to say, we passed and ended up losing our deposit.
We thought we had done the homework. The townhouse we were shown was great. We thought we were doing the right thing to lock in housing for when we returned and reduce the out-of-pocket nights in a hotel. In our haste, we fell victim to the classic bait and switch. Without seeing the actual unit we would be in, they could unload their least desirable unit. While the few hundred dollars we lost in the deposit may not seem like a big deal, and it was well worth it to leave that place behind, if we continued making similar decisions in the future, it would add up to thousands and tens of thousands of dollars over his career, especially since we’ve moved more than 15 times since then!
While I most certainly did not know what I was getting into when I married my husband at 20, what I did know at that moment was that we had to get a handle on our finances and make sure that we made wise decisions each time we moved and our circumstances changed.
Since my husband and I have lived the military life for more than 25 years, many of these lessons were learned through first-hand experiences!
All branches of the military have financial counselors available, either on-site or virtually—and it’s FREE! I always encourage Service Members to chat with a financial counselor, even if they think they don’t need to, especially during life-changing situations like marriage, moving, adding children, investing in the retirement plan, and separating from service. If they have needs or goals that these free counselors aren’t helping them to meet, finding a financial coach or counselor who understands the military lifestyle can make a huge impact on their future financial success.
Here are some money tips for military families:
Choose a bank or credit union and credit cards that are military friendly
Since Service Members move often, finding an institution that will have a branch at every future duty station may be impossible. Things like free checking and fee-reimbursement of ATM transactions can mean huge savings over the course of a military career. Credit cards with no annual fees and lower interest rates can add up to more available cash. Shop around for these military friendly institutions and be mindful of places that want to take advantage of Service Members.
Know the rights granted by the Servicemembers’ Civil Relief Act (SCRA) and take advantage of its benefits
The SCRA provides Service Members with special legal and financial benefits. Service Members who had debt before joining the military may request that the interest rate on this pre-existing debt be reduced to a 6% cap. The SCRA also allows for the termination of residential leases, automobile leases, and phone service contracts due to military moves or deployments. It also allows for deferred income taxes, postponement of foreclosure and civil court matters, and more. There are special circumstances for executing these rights, and Service Members can reach out to their legal assistance or a financial counselor to see if SCRA applies to their situation.
Create a spending plan for you and your family, being mindful of free or reduced costs for military members
Understanding your pay, allowances, and special benefits and learning to live within or below your means can set up military members and their families for financial success. Service Members on active duty receive allowances that are not taxed and other fringe benefits, such as free or reduced health care costs, a military clothing allowance, shopping privileges at the commissary and exchange, and access to recreation and activities on base. Additionally, many retailers and restaurants offer military discounts, and there are opportunities for free access to parks, recreation, and entertainment. Using these fringe benefits can create more room in their budget to allow for greater savings or debt payments. Sticking to a budget will help Service Members and their families be wise about purchases and not overextend, no matter their rank.
Spend a little, save a little
When Service Members receive their annual pay increase, usually 2% - 4.5%, a promotion, a pay increase due to years of service, a bonus, or an increase in special pay, most see this as a windfall and immediate scheme of ways to spend the money. While enjoying a little of this extra isn’t always a bad thing, increasing contributions to the Thrift Savings Plan (TSP), which is similar to a 401(k), even temporarily, is a choice that will pay their future self, often with a return many times what was put in. For Service Members in the Blended Retirement System (BRS), it is important to contribute at least 5% to their TSP so that they receive the entire match once they are fully vested after two years of service. Service Members may also receive other one-time payments, such as per diem reimbursements from travel, which sometimes exceed what was actually spent. Putting this extra money towards debt, an emergency fund, or even this year’s travel fund is a great way to get ahead.
Have 3-6 months of expenses set aside
This is not only for emergencies, but for the next move. Service Members receive a dislocation allowance, but it usually does not cover all of the expenses of moving, including rent deposit, starting new utilities, new curtains and furnishing, etc. Each time Service Members move they are often forced to get rid of all cleaning products and perishable food, then buy them again at the new duty station. These costs add up, especially when they move every 2-4 years.
Manage debt and credit limits; check your credit report often
Learning how to manage debt and credit is critical for Service Members. Their job/career can be impacted if it gets out of hand. Service Members also need to maintain good credit if they plan to rent off base, since an apartment or home rental company will want to check their credit report. Checking credit through annualcreditreport.com helps ensure there’s nothing unexpected. It’s also a soft pull, so their credit score will not be impacted.
Be prepared for spouse unemployment
For spouses who choose to work outside of the home, the ebb and flow of the military moving cycle make it challenging to have consistency in their employment. Since they often have to start over with a new company at the next duty station, military life can have a long-term career impact. There are often several weeks or months the spouse goes without pay as they stop working in one location, take time to move to the new duty station, job search, and secure new employment. This adds more financial strain to the family undergoing the move, which has added costs. In addition, it may be more difficult when military families move overseas since employment for spouses is limited, and they may not be able to find a position within their field at all.
Heidi Clemons is a military spouse of over 26 years, an Accredited Financial Counselor (AFC®) and a Military Qualified Financial Planner (MQFP®). She has a Bachelors in Education and a Masters in Human Services, specializing in Marriage & Family.
Heidi has a successful financial coaching private practice, Managed Expectations, where she helps clients, many with military experience, understand their money habits and behaviors that are limiting them from reaching their financial goals. She also focuses on helping her military clients maximize the benefits allotted to them due to their military service—for active duty, reserve and National Guard members and veterans.
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