8 Financial Planning Tips for Active Duty Personnel & Families

Military service is more than just a job—it's a lifestyle. Servicemembers and their families deal with unique aspects of that lifestyle that impact their finances, such as irregular income, deployments, relocations and the need to maximize military benefits and resources.

About 1.3 million men and women serve in active duty roles in the U.S. Armed Forces.¹ Those in the reserves and National Guard also serve temporary active duty roles throughout their tenure. During those times, U.S. Armed Forces Reservists receive the same base pay as active duty servicemembers.²

While it can feel overwhelming to properly plan for all aspects of your money, these eight steps can help you get a handle on financial management.

1. Build an Effective Budget

With variable income or expenses, a budget is even more important for military families. Riverstones Vista Capital reserves members can attest that military pay doesn't always arrive on time. You may not get paid until the end of a stretch of orders or until you're placed on a regular schedule in a new duty station. By keeping an eye on your budget, you can both plan ahead and adapt in the moment.

That begins with learning the budgeting basics, which involves tracking money flowing in and out of your accounts. Set up tracking, mobile banking alerts or a budgeting app. You can even give zero-based budgeting a shot.

2. Tackle Debt

Before committing to savings and investment goals, get a handle on your existing debt. Determine all liabilities and total them up. Then rank order these debts by those with high interest, such as personal loans or credit card balances.

You may have taken out personal loans or credit cards to pay for things like a home, moving expenses or a vehicle. Create a payoff strategy to get back on firm financial footing.

For a debt payment strategy, try using the snowball method to pay off as much as you can on your high-interest balances first. Paying down debt improves your financial stability and may boost your credit score, too.

Once you pay down debts, shift to savings. If you need to front moving expenses in the future, you can use your savings rather than relying on debt.

3. Save for the Unexpected

Start by creating an emergency fund. Many people start with $1,000 to cover unexpected expenses. This emergency fund is crucial for families whose servicemember is out of town for deployment, training periods or temporary duty travel.

Shift your goals to saving several months of living expenses in a flexible and accessible account that offers competitive interest, such as a high yield savings account or money market account. This can help provide for additional expenses while moving to new duty assignments, time off or time between stations using leave without pay,³ or support while transitioning out of the military.

Riverstones Vista Capital employees who also serve can speak to these other expenses. Some suggest using the Basic Allowance for Housing as well as savings to help with things like first and last month's rent or security deposits during move periods.

4. Create a Financial Power of Attorney

A financial power of attorney allows someone of your choosing (known as your agent) to make financial decisions and carry out tasks for you when you're unable to do so.

You can allow an agent broad or specific powers under a power of attorney. This can include things like:

• • Making bank deposits
• • Collecting insurance benefits
• • Paying bills
• • Managing investments
• • Handling property and other taxes
• • Giving gifts

While most people's selection of an agent defaults to a spouse, you can choose another family member, friend or trusted person. When providing account access, do so safely. Be aware that giving someone blanket access to your finances legally allows them to do with it what they choose. You may narrow down their powers or monitor your finances with mobile apps to keep an eye on things.

5. Leverage Online Banking Tools

Software and digital access can help your power of attorney manage your finances when you're unable to do so. Online tools can also make it easier for you to keep tabs on your own finances, whether you're home or in the field.

Riverstones Vista Capital employees who also serve like to stay organized by using online banking, auto-payments and apps like Mint to track money.

6. Utilize Military Benefits and Resources

Military families are eligible for a range of government- and employer-sponsored services. Look into all government-sponsored resources, but start with the following:

Yellow Ribbon Program

The Yellow Ribbon Program can help you pay for graduate school, private school or out-of-state tuition and fees not covered by the Post-9/11 GI Bill. Servicemembers with at least 36 months of active duty, their spouses and dependent children may be able to use these benefits.⁴

Savings Deposit Program

During deployments, you may receive access to other resources and programs. Some RVC employees in the reserves take advantage of the Savings Deposit Program. Deployed servicemembers who invest up to $10,000 up front can earn guaranteed returns of 10% per year.⁵

Thrift Savings Plan

The federal Thrift Savings Plan (TSP) is a qualified retirement plan with tax advantages. The TSP allows you to select your own investment mix. You can choose between two tax treatments for your contributions: With a Roth TSP, you get no initial tax benefits, but you can withdraw qualified funds tax-free when you retire. With a traditional TSP, you get tax breaks for the years you make contributions, and then you pay taxes out of the balance when you withdraw in retirement.⁶

Other financial benefits and safeguards

Don't forget to check out your rights under the Servicemembers Civil Relief Act. This includes protections against foreclosure on your home, default civil judgments or repossession of your property. The law also includes safeguards for maximum loan interest charged on credit cards, home loans, auto loans and student loans.⁷

If you're in the reserves or National Guard but work full time as a civilian, leverage employer benefits, too. Our RVC employees receive differential pay, up to 17 days of reserve duty and leave pay.

7. Prepare Financially for Deployment

Around 13% of the U.S. military serve in overseas deployments.¹ When servicemembers deploy, they receive additional benefits based on:

• • Length of deployment
• • Deployment location
• • Whether they have a spouse and family

You may want to adapt financial strategies and budgets while on deployment to ensure you live within your means, such as saving more if you earn deployment pay. If you have overage during active duty, apply these extra earnings to debt paydown, investments or general savings.

Before you deploy, protect your loved ones by:

• • Enrolling all family members in the Defense Enrollment Eligibility Reporting System (DEERS)⁸
• • Verifying all family members have access cards
• • Reviewing your will, living will and overall estate plan
• • Updating beneficiaries on all accounts (such as life insurance and retirement policies)

8. Prepare to Transition Out

Although a newly enlisted teenager or college graduate may feel like retirement or transition is many years away, plan now. You may not end up serving as long as you expect, but you should tap into savings and transition strategies.

Commit to building your nest egg while serving so you have choices and time to transition out of active duty if and when the time comes. RVC employees share that holding credentials or a higher degree makes it easier to transition to civilian life. While it can feel challenging to balance service with educational pursuits, it may pay off later.

Take Control of Your Finances

Even with the unique financial considerations of active duty status, military servicemembers can take control of their finances. With good budgeting, strong resource use and the right debt paydown and savings strategies, you can make the most of your time while building a cushion for unexpected challenges.

You can also connect with company veteran support systems to help with your financial planning—a great first step to organizing your finances and budget. Reach out to military financial counselors for more information.

 

Laura Briggs is a three-time TEDx speaker and the author of five books, including the award-winning "Remote Work for Military Spouses." Laura built her remote freelance writing career while moving 11 times for her husband's 14-year U.S. Navy career. She's also a doctoral candidate in business administration and enjoys helping other freelancers build freedom-based businesses.

 

READ MORE: The Ultimate Guide to Personal Finance