Whether you're a recent recruit, about to leave the service, or somewhere in between, you know that military service creates unique financial challenges for military families. Unexpected or frequent moves, difficulty spouses have obtaining employment, and transitions to civilian life or retirement are just a few of the roadblocks to a stable, financially sound family life.
Fortunately, there are solutions both in and out of the military infrastructure. Here are a dozen helpful financial tips for members of the military and their families.
- Resources to help military families with their finances are widely available both inside and outside the government.
- Access to most resources must be initiated by the service member although some such as spousal employment assistance can be initiated by the family member.
- The Servicemembers Civil Relief Act (SCRA) is a wide-ranging law that provides numerous legal and financial protections for service members and their families.
- Newer policies, including the right to share GI Bill education benefits with family members, are less well known.
- Separating or retiring from military service, though stressful for service members and their families, is well covered by various agencies.
1. Use available tools to help deal with the pandemic's economic impact.
During the worst of the crisis, civilians were urged to “hunker down.” Military personnel and their families were different. Deployment, relocation, and other factors created both personal and financial risks for service members and their families. Many of those problems remain. Fortunately, there are some helpful tools available.
- Hardship duty pay up to $100 per day and $1,500 per month for service members forced to self-isolate away from home
- Waived performance requirements for special or incentive pay if you can’t perform your duties
- Basic housing allowance for dependents who moved while you stayed behind or vice versa
- Emergency family financial relief for Army, Navy and Marines, or Air Force including interest-free loans or grants
- Interest-free loans for members of the National Guard and their families
- Financial counseling to help with personal finance basics, credit problems, debt repayment, and emergency financial assistance through Military OneSource
2. Take advantage of the Servicemembers Civil Relief Act (SCRA).
The Servicemembers Civil Relief Act (SCRA) provides special financial and legal benefits for service members, including a 6% interest rate cap on any loans you took out before you began active duty. You must apply for this benefit through the lender. This is especially helpful to members of the Reserve or National Guard who may take a significant pay cut when activated.
The SCRA also gives you as a service member additional rights, including postponement of foreclosure and civil court matters, deferred income taxes, eviction and default judgment protection, protection of small business assets, and the right to terminate a residential lease, automobile lease, or phone service.
Other provisions include protection from repossession of property, life insurance coverage protection, the ability to suspend professional liability insurance, and protection of voting rights in your home state. All this is contingent on orders for a permanent change of station (PCS) or temporary deployment of 90 days or more.
Credit monitoring is not the same as the annual access to free credit reports available to everyone. Credit monitoring provides continuous surveillance of your credit files and alerts you if anything is amiss.
3. Sign up for free credit monitoring.
If you are in the National Guard or on active duty, a recent Federal Trade Commission (FTC) rule lets you receive free credit monitoring to provide protection from fraud or identity theft. To enroll in the program, go to the military monitoring webpage at one of the three major credit agencies, Equifax, Experian, or TransUnion.
When you sign up, you will be notified by mobile app, email, or text if certain changes occur in your credit file, including a change of address, payments that are more than 30 days late, bankruptcy information, foreclosure, liens, or new accounts opened in your name.
4. Get help finding employment as a military spouse.
The Department of Defense (DOD) Spouse Education & Career Opportunities (SECO) program and the Military Spouse Employment Partnership offer educational and job placement opportunities for military spouses to help overcome many of the obstacles your spouse may face finding and retaining employment as well as pursuing a career path of their choosing given the rigors of military family life.
5. Know and use available housing resources.
In addition to protections provided by the SCRA (see No.2 above), you have access to additional help with housing issues. These include a tax-free housing allowance and the ability to take out a Veterans Administration (VA) loan, which lets you borrow with no down payment and no private mortgage insurance (PMI).
If you are having trouble paying your mortgage, you may qualify for military hardship. This could apply if you received PCS orders, are currently on active duty, or you or your spouse were injured on active duty. Finally, consult the National Resource Directory for a list of housing resources for members of the military.
The monthly premium for $400,000 in SGLI life insurance for active-duty service members.
6. Take advantage of inexpensive life insurance and survivor benefits.
Active-duty service members and family members have access to low-cost life insurance through Servicemembers’ Group Life Insurance (SGLI) and Family Servicemembers’ Group Life Insurance (FSGLI) respectively. Coverage of up to $400,000 for service members, $100,000 for spouses, and $10,000 per dependent child is available at low monthly rates or, in the case of dependent children, free.
When you separate from service, you may be eligible to switch to Veterans' Group Life Insurance (VGLI) and keep it as long as you pay the premiums. Your spouse, covered under FSGLI, can convert their FSGLI policy to a permanent individual life insurance policy when you separate or retire. Some veterans and family members may also be entitled to burial benefits, death benefits, and memorial items. The rules are complicated, but a phone call to USA.gov at 1-844-872-4681 (8 a.m. to 8 p.m.) Eastern, Monday through Friday, can get you an answer.
7. Learn about low-cost investment opportunities.
The Thrift Savings Plan lets active-duty service members invest at low cost and choose from among short-term U.S. Treasury securities, index funds made up of domestic and international stocks, and several target-date (lifecycle) funds, each of which becomes more conservative as you age.
Contribution limits for 2021 are $19,500 in elective deferrals with an additional $6,500 catch-up limit if you are 50 or older. You automatically receive 1% of your basic pay even if you don’t contribute. You can receive up to 3% matching with up to 3% in contributions and 50% of the next 1% in contributions. There is no agency/service matching after 5%. Contributions can be traditional or Roth. Your spouse cannot contribute to a TSP unless they are also eligible through government employment or are active-duty service members themselves.
8. Earn 10% in a high-interest savings account.
The DOD Savings Deposit Program pays 10% interest, compounded quarterly, on invested amounts of up to $10,000 while you are deployed to a designated combat zone. You must be receiving Hostile Fire Pay and be deployed for at least 30 consecutive days (or one day in each of three consecutive months) in order to participate in the program.
You can close your account after you leave the combat zone, but interest will continue to accrue for 90 days after you return from deployment, so you might want to leave the money where it is. Your spouse (with power of attorney) can initiate and change savings amounts in your account.
9. Leverage tax-free residency for longer.
You can maintain legal residence in one state, even if you are transferred to another. This could help if, for example, you are stationed in and have established residence in a tax-free state such as Florida or Texas and move to another state where you would be subject to state income taxes. The SCRA protects you and your spouse from being forced to change legal residence when either of you move. Yours (and your spouse’s) state of legal residence is typically where you:
- Maintain voter registration
- File and pay state income taxes (if applicable)
- Maintain a driver’s license
- Register vehicles
This applies only to your military income. If you have other work or income outside the military, that income must be reported to the state where it is earned. For your spouse, SCRA applies to any income they earn in the state where you are stationed.
The provisions of SCRA do not apply to military-dependent children. If your child is required to file state income taxes, they need to file where they physically reside.
10. Transfer your GI Bill benefits to your family.
If you have served for at least 36 months since Sept. 11, 2001, you have access to the Post-9/11 GI Bill. This can cover the cost of in-state tuition and fees for a public college for up to four academic years or up to $26,042.81 per year for a private college or foreign school. Further, you can transfer your benefits to your spouse or children provided the following are true:
- You've completed at least six years of service on the date your request is approved, and
- You agree to add four more years of service, and
- The person getting benefits has enrolled in the Defense Enrollment Eligibility Reporting System (DEERS)
11. Don’t forget military discounts.
This one is simple: Just about everywhere you spend money, ask if there is a military discount. Some places advertise; others do not. The only way to find out for sure is to ask. To save time, go online and search for military or veteran discounts by store or brand name. Most businesses that offer a discount require a military ID or proof of military service. Family members may or may not be able to take advantage of the discount, depending on the individual policy of the business.
12. Make the most of resources for life after the military.
At some point you will ETS, otherwise known as expiration term of service. Some will separate and move on to another career. Others will retire and begin collecting their military retirement annuity.
You and your family need not transition alone. Some people find it difficult to translate their military skills to the civilian job market. Others are unsure where they want to live post-retirement.
For veterans seeking post-separation employment, USA.gov lists several job and training resources for veterans. You should also check out the Veterans Benefits Timetable, which lists important dates and deadlines for various VA benefits as well as where to go to get them.
If you are retiring from military service, refer to the Military OneSource's Military Retirement: Do You Have This Covered? page, which lists important retirement actions and when they need to be completed.