Tips for Military Personnel and their Families

Managing your money on a military budget is tough enough. Now with so many service men and women being summoned to duty away from home, added complexities and costs can arise. Many military families nationwide are seeking advice about what they need to do differently with their money.

Financial planners say that, if you're already working with a budget, saving, and setting goals and objectives, you shouldn't really deviate from those long-term goals, even in uncertain times. Planners advise military families to consider the following tips:

1. Set Goals. If you haven't already, set aside time to think about what you want out of life. Set short-term goals, intermediate and long-term goals for your life. Then plan your financing accordingly. You wouldn't go into combat without a plan, and you shouldn't spend your money without one either.

2. Live by a budget. Know what's coming in and what's going out.

3. Pay yourself first. Save a portion of your earnings every month. When you receive bonus pay or tax free pay, save more than you spend.

Military personnel who serve in a combat zone can exclude certain pay from their income for purposes of paying income taxes. This includes active duty pay earned in any month served in a combat zone, including:

  • Imminent danger/hostile fire pay.
  • Reenlistment bonuses if the voluntary extension or reenlistment occurs in a month you served in a combat zone.
  • Pay received for duties as a member of the Armed Forces in clubs, messes, post and station theaters, and other non-appropriated fund activities in a month you served in a combat zone.
  • Awards for suggestions, inventions, or scientific achievements during a month you served in a combat zone.

4. Establish an emergency fund. Most financial planners suggest an emergency fund equaling approximately three to six months of living expenses. If it sounds like a lot, realize it is. Having it will help ensure your financial security if your income should change dramatically.

5. Keep debt down. While your spouse is away, don't comfort yourself with a new wardrobe or unnecessary expenditures that cause you to go into debt. Keep credit card spending to a minimum. Take advantage of loans that make sense. Investigate opportunities available through the Veteran's Administration. If possible, always pay cash.

6. Take advantage of deadline extensions for things like Federal Income Taxes. These extensions are available to military personnel serving in a combat zone or supporting a combat operation. The IRS also offers more flexible deductions for moving expenses associated with military moves. Extensions provide additional time for filing and payment to occur. Look at it as one less thing to worry about.

7. Retirement. Although military careers can end with military pensions and veteran's benefits, planners advise clients to begin saving their own money for retirement at an early age. Bonuses and other tax-free income can go a long way toward ensuring a comfortable and well-deserved retirement.

8. Insurance, Insurance, Insurance. Take advantage of military discounts after you've researched the right insurance to meet your needs. Term policies will generally provide military families with the most coverage for the smallest premium, but they have no savings feature.

When the United States is engaged in a war against another country, most experts expect that travelers to the conflict region generally would be barred from collecting on property, accidental death or injury claims. Military personnel could face similar exclusions. Your individual insurance agent can provide you with the details on your specific policies.

9. Get Organized. Keep your important documents in a safe place and be sure to tell someone where to find the key. Update your will, and consider pre-planned funeral arrangements. Additional benefits (up to $1,100) are available to families of service personnel killed in active duty. In addition, there is no charge for a grave in a national cemetery. On a lighter note, make arrangements for quarterly or semi-annual premiums or bills to be paid to ensure that automobile or homeowner's policies do not lapse while you are away.

10. Do your research and spend time on your finances. Since only one in 135 million people wins the lottery, we all have to take responsibility for our own financial success. Stay abreast of benefits available to you. Communicate what you learn with your family and loved ones.

Just remember that advanced planning and sticking to the plan is the key to any successful mission. Putting your financial house in order is always a smart move. When times are uncertain, that stability is one less thing to worry about. It's also one more thing to look forward to when conflicts are resolved and everyone returns home safely.

To obtain additional information and a summary of the Department of Veterans Affairs benefits, please contact or write:
Dept. of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420

In addition, the below Web sites provide information on available benefits to military personnel and their families:


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