As a member of the United States military — whether you joined a few months ago, have decades of service to your name or are a career-retired veteran — you should be proud and confident of your success and capabilities. But just like everyone else, there are probably some skills that you'd like to improve upon.
If financial literacy is one of them, many of your fellow service members feel similarly. Perhaps due to the rather hectic nature of military life that can take you away from proper planning, the vast majority of service members are on shaky ground when it comes to their finances and money management. According to a Harris Poll commissioned by the National Foundation for Credit Counseling, approximately 90% of active duty service members say they stress about money. The same goes for spouses, with 84% indicating they often felt ill at ease about their finances.
There are several reasons as to why this is the case For example, more than one-third of military personnel surveyed by Harris were behind on their expenses, with nearly the same percentage of spouses attesting to be in a similar situation.
Many find money management challenging
Financial hardship isn't necessarily unique to military members. In a more recent poll also conducted by Gallup, 34% of adults surveyed said they couldn't help but worry about the potential of encountering severe financial hardship. Some of these concerns have been realized due to the widespread lockdowns imposed by government officials in response to the COVID-19 pandemic. Approximately 63% of all Americans in a Highland Solutions survey said they were living paycheck to paycheck.
However, due to the itinerant nature of military life — unknown deployments, moving cross country, cost-of-living adjustments, etc. — the repercussions of certain financial decisions can be magnified. In other words, there is less room for error, according to Rebecca Steele, president and CEO of the NFCC.
"Men and women in uniform face many challenges and daily sacrifices while serving our country," Steele told CNBC. "Financial concerns shouldn't be one of them."
As reported by CNBC, in an effort to help active duty service members get their financial lives back on the straight and narrow — or, ideally, prevent them from falling off the path — the military now requires all recruits to actively participate in ongoing financial education training. Yet some financial advisors aren't altogether confident that the lessons they learn will stick and result in lasting change that they apply in day-to-day affairs.
If any of these economic issues sound familiar, you can see that many people are in the same boat — both inside and outside of the military. The following are a few recommendations that may help you make your weak points your strengths. It may take some time and will definitely require ongoing discipline, but the consistency and efforts you apply will pay off — perhaps in more ways than one.
1. Create a budget
Think about the typical products or services that you buy in a given week or month. Whether it's utility bills, groceries, clothing, take-out dinners or a subscription to a streaming service, these costs make up your budget. The goal of any budget is to spend less than you're earning so that you can save or invest it.
The easiest way to create a budget is by keeping a list of all the things that you purchase inside of a particular time period. When you add up the cost of each, take that number and subtract it from what you earn per paycheck. So long as more money is coming in than going out, you'll at the very least break even, but the goal is to live below your means while at the same time being comfortable.
In partnership with your roommates, spouse or significant other, come to an agreement on how much is the proper amount to spend on necessities, dining out and other odds and ends. At the same time, consider canceling or no longer paying for services that you don't really need or rarely use.
Whatever you decide, the key is to remain consistent. Discipline is a core characteristic within the military so this may come easily. But if not, work with your financial partner and try to hold each other accountable.
2. Speak with a financial consultant or advisor
One of the very best things you can do for yourself when it comes to improving your financial situation is meet with a financial consultant. As their title suggests, financial consultants are professionals who meet with clients and aim to improve their money management. As noted by the National Association of Personal Financial Advisors (NAPFA), consultants are duty bound to serve their clients' best interests. It's what is known as their fiduciary responsibility. This means that they're required to be objective and only make recommendations that are in line with your goals. Thus, if your advisor happens to be a member of the NAPFA, you can trust their judgment and the guidance they give to you.
Consider visiting NAPFA's website. You may be able to find an advisor who is near you that can take a look at your portfolio (if you have one) or work on a plan that can get you closer to meeting your financial goals. Alternatively, if you don't have goals, a financial consultant can help you create some based on your current situation.
3. Leverage the variety of financial services at your disposal
No matter what branch of the military you're in, you have many tools that may be able to help you get into a better monetary situation. As previously noted, this includes the financial literacy coursework you're required to take. The GI Bill, passed by Congress back in 1944, created different programs that can make it more financially feasible to attend a college and obtain an undergraduate or graduate degree.
You may also be able to take advantage of interest-free loans as a soldier through Army Emergency Relief, a non-profit organization. Alternatively, if you have a low-credit score — thus making it more difficult to get a home loan — a credit builder loan can help improve your score by paying off the loan whenever your payments are due. Omni Financial can set you up with a credit builder loan, even with poor credit.
4. Prepare for your golden years
If you're like most Americans, you probably intend to retire when the appropriate time comes. Are you confident that you'll have the means to do so without a full-time job to support yourself? Of course, the military does offer retirement benefits to those who devote the better part of their professional lives to the Army, Navy, Coast Guard, Marines or Air Force. In the past, those whose military service spanned 20 years or longer were eligible to receive 50% of what they earned while on active duty. But since the introduction of a new retirement plan, the payouts for more recent military personnel is dropping to 20%, CNBC reported.
This is another reason why it really makes a lot of sense to work with a financial consultant. They can examine which assets, if any, you've put away and the extent you can use them to fund your retirement. They may offer solutions on other steps you can take to further strengthen your retirement readiness.
Additionally, you may want to check out the Consumer Financial Protection Bureau's (CFPB) website. The CFPB has a variety of tools and resources you can use to further educate yourself in all things related to financial management.
With over 50 years of experience in military lending, Omni Financial understands the issues that service members like you may encounter pertaining to finances. Whether you're looking for a little extra spending money to tide you over or you're aiming to improve your credit score and a loan can help, Omni Financial is here for you. Please contact us today for more information or to apply for a military loan. Our interest rates are competitive and the amounts you borrow can be as little as $500 to as much as $10,000. We also offer flexible repayment schedules, from six months to three years.
The information provided in this blog post is for informational purposes only. It should not be considered legal or financial advice. You should consult with a financial professional to determine what may be best for your individual needs.