No one joins the military to get rich, and many who join lack the financial skills needed to successfully navigate the economic pitfalls that deployment, single-income households and frequent moves can bring.
A 2015 survey by debt counseling organization VeteransPlus reviewed the financial status of more than 38,000 service members. It showed military families carry an average of $13,700 in unsecured debt, mostly on credit cards. And while many civilians can carry debt with no effect on their job, military members can be denied top-secret clearances if they let debt get out of hand, as that person could be more open to bribes than someone who is not in debt.
To that end, the America Saves organization is holding its 11th Military Saves Week, from Feb. 27 through March 4, a week aimed at encouraging military members to “Set a goal. Make a plan. Save automatically.”
The weeklong campaign often involves informational fairs at military installations around the world, with participation from financial institutions, nonprofit organizations and government agencies. The goal is to get military members to take the Military Saves Pledge, through which a service member pledges to reduce debt and build wealth.
MilitarySaves.org offers four goals for those new to saving and investing aimed at helping service members lay a strong financial foundation for the rest of their lives.
1. Review your credit report and score.
Requesting a free credit report is easy. MilitarySaves.org suggests going to www.annualcreditreport.org or calling 877-322-8228 and reminds people to request their credit score as well.
When military members take the Military Saver pledge, the FINRA Investor Education Foundation, part of the Financial Industry Regulatory Authority, provides members and their spouses who have a .MIL email address free access to its “myFICO” tool, which offers advertisement-free credit scores and educational tools.
Reviewing your credit report lets you see what potential lenders see and can alert you to any signs of identity theft. Credit scores are a key factor in lenders’ decisions to loan money and at what rate the money should be loaned. The higher your credit score, the better terms of credit you are likely to receive, MilitarySaver.org states. Knowing your score is the first step toward improving it.
2. Set up an emergency fund.
Open a savings account at a bank or credit union, and set aside money for unplanned expenses such as car or home repairs, instead of using a credit card to pay for those expenses.
Save and invest at least 10 percent of what you make. Military members have access to the government-sponsored Thrift Savings Plan. Enroll and contribute as much as possible while staying within your budget, MilitarySaver.org recommends. Most retirement savings accounts offer a choice of investment options that include a mix of stocks and bonds to help people diversify their investments, as well as life cycle funds that reduce risk as you age.
According to MilitarySaves.org, investment professionals believe saving 10 percent is the minimum needed to ensure a comfortable retirement. Federal civilian employees automatically deposit 3 percent of their salary into the Thrift Savings Plan (this can be stopped, reduced or increased eventually). This 3 percent plan is common for civilian workers but is much less than what workers will likely need by the time they are ready to retire.
3. Read one book on personal finance.
MilitarySaves.org recommends choosing a book that speaks to where you are in your life. Personal finance books generally speak to a variety of financial topics, from investing to life insurance, and most contain relevant suggestions.
The website Save and Invest has more information about saving geared toward military members.
Kiplinger’s Finanical Field Manual also available
The Kiplinger organization, a pioneer in personal finance and home of the nation’s first personal finance magazine, has partnered with the Investor Protection Trust and Investor Protection Institute to offer U.S. military members an updated version of “Kiplinger’s Financial Field Manual: A Personal Finance Guide for Military Families.”
The updated guide, which is being released in anticipation of Military Saves Week 2017, includes detailed information about retirement plan choices available to men and women who have joined the military between 2006 and the end of 2018. Service members must choose between staying with the retirement system that has been in place for decades or choosing a blended plan that includes both a pension and contributions to the government’s Thrift Savings Plan. Enlistees after 2018 will automatically go into the blended plan.
The Field Manual features a special section about the new retirement plan. It also contains information about special financial benefits open to military members and their families, including tax breaks, low-cost investments, legal protections, education opportunities and insurance programs.
“The latest edition of the ‘Financial Field Manual’ is a powerful weapon in the fight for financial security for the men and women who serve in the military,” says Knight A. Kiplinger, editor of Kiplinger’s Personal Finance magazine and Kiplinger.com. “We know they confront unique, often complex financial challenges. We want to help make sure they take advantage of the valuable benefits and investing opportunities available to them.”
The guide also helps service members distinguish scams from good information, says Don Blandin, president and chief executive officer of Investor Protection Trust and the Investor Protection Institute.
“While members of the military have access to some very valuable benefits, they also find themselves singled out by unscrupulous swindlers who target and then prey on active and retired military personnel. Our step-by-step guide makes it very clear what military families should do … and what they should avoid,” Blandin says.
The following topics are covered in-depth by the manual:
- Investing In Your Future: Make the Most of Special Savings Plans and New Rules Your Military Benefits: Discover all the Advantages and Protections to Which You’re Entitled
- Before and After Deployment: Take Smart Steps to Protect Your Family and Your Finances
- Buying and Selling a Home: Benefit From Special Perks and Resources to Ease Military Moves
- Financial Fraud Watch: Protect Yourself From Scams That Target Service members
- Leaving the Military: Plan A Smooth Return to Civilian Life With This Checklist
- Financial Resources for Military Families
Find the updated Financial Field Manual online here.