Right before my husband first re-enlisted in active duty military, we sat down and briefly discussed our “future military finances”. It was a quick conversation: we didn’t have kids yet, I worked full time, and in general, we didn’t believe it to be a bid deal.
Man, we were wrong!
Military pay can be confusing to a new military spouse. Not only are there a TON of acronyms to decipher, but your overall pay can change not only from duty station to duty station, but from job to job!
For example, in the Navy, sailors receive Sea Pay and Sub Pay when out at sea, but when on shore they do not. Additionally, each duty station brings different BAH, which affects housing options, utilities, budget, etc.
I remember looking at his first LES, and I felt as if my brain was going to explode. What did all this mean? What were all these deductions and allotments?
Thankfully, I have learned my way around my husband’s income and learned (the hard way) the pitfalls and mistakes to avoid when it comes to finances. So now I am going to share these gems with you: Top 5 Military Finance Mistakes to Avoid!
1. Not Tracking Finances
Having solid budgeting habits is one of the most important habits military families (and ALL families) should have. Both you and your spouse should be on the same page with where your money goes and how much of it goes to each category.
A good budget can be a game changer. Look back at the last 1-2 months. Write down all of your necessary expenses (rent/mortgage, utilities, food, etc), your “fun” categories and your savings goals. I am sure you will probably find that “surprise” expense you didn’t realize you were putting money into. Don’t forget those recurrent charges (Netflix, Internet, etc)!
My husband and I have not always been the best at this, especially early in our military life together. What really made the difference was moving to a specific budget, being smart with our credit cards and using a mostly CASH system for expenses.
If you need to use credit cards, focus on paying them off every month and sticking to the budget using credit cards. Plus companies like USAA have amazing resources AND have points for cash back that you can get back some money you spend.
2. Pay Off Debt With Extra Money
This goes hand in hand with having a solid budget. Extra money is temporary: that is the cold, hard fact. Hence why is is called “extra”. This can make focusing on paying off debt more difficult. It is more fun to take that extra money and spend it on items you want NOW.
However, deployments (and the extra income that comes with it) are actually opportunities to rid yourself of unwanted debt that can weigh you down and cause longer lasting problems. Every extra cent you can put away towards paying off debt or putting into savings (once that debt is gone) will have positive affects in your finances.
3. Create a PCS Fund
When moving every 18 months-3 years, having a fund for PCS expenses can be very handy. Many people feel that since the “military moves you” that everything will be covered and you won’t have to put out extra expenses. That is simply not the case.
Most expenses you will have to pay up front (especially in regards to traveling to your destination) and wait for reimbursement, which can take a while. Not having a fund set aside can be a recipe for debt. This is something I had to learn the hard way over the last few moves.
4. Putting Off Starting a Retirement Fund
If you are not already participating in the military retirement plan, I would highly recommend you do! The Thrift Savings Plan has 5 widely diversified index funds where you can invest in almost the entire U.S. stock and bond markets, and developed foreign markets.
Additionally, especially for you as a Military Spouse, having a personal retirement fund is never a bad idea. Although it would be extremely unfortunate for military pension to be cut, other military funding has been cut before and nothing is certain.
An IRA or other type of 401K from a reputable company would put you in a sure place to keep your future finances safe. We have 2 IRA accounts, one with USAA and one with T.Rowe Price (my rollover from my old job). These companies both have great resources when you are ready to take that step!
5. Recognize Weaknesses and Then Get Help!
I have never liked discussing finances. It’s a touchy subject and there is a stigma that if you aren’t perfect at managing money, then you must be failing in some way. Trust me: that is simple NOT the case.
Ignore any hypothetical judgment and get to know the resources that are available to help you! Did you know there are FREE resources on many military bases and they may be able to help you with debt counseling and possibly even emergency funding? Yep, so go make sure to check them out!
You got this!
Personal finances are just that; personal. Maybe these situations do not apply to you, or maybe they do. Either way, I hope this guide will help you avoid these mistakes, whether for the first time or the 30th and to better secure your finances for the future.
And be sure to check out my FREE Budget template as you get going on your financial goals!
