Warfighters combat financial foes
As if military life wasn’t tough enough — battling enemies, sacrificing for your country — service members also have to remember the home front: their families.
Spouses and children of those deployed face extra burdens, especially financial when the main breadwinner is half a world away.
He compiled his lessons and published them in The Military Guide to Financial Independence and Retirement.
In many respects, military people live the life of vagabonds. It’s tough to put down financial roots at one place because in just a couple years they are off to new assignments — with or without their families.
“Common issues are perpetual military pay problems, managing finances while deployed, frequent transfers, confusion about an overwhelming variety of benefits, military spouse career obstacles and America’s low financial literacy,” Nordman said.
“Ironically, I think the military financial education effort is better than many corporate efforts — especially 401(k)s,” he said. “Yet, everyone has a long way to go.”
Know before you go
Before deployment, military members need to make sure their family members can live financially on their own — know what bills to pay, to whom and when.
“Autopilot!” Nordman said. “There are Thrift Savings Plan contributions — especially the Defense Department’s Blended Retirement System matching — Roth IRA contributions, paying off debt, paying bills and financial powers of attorney. Consider Servicemembers Civil Relief Act benefits.”
While deployed, military members need to stay in touch with families back home in case financial circumstances change. Be ready to give advice in case of car crashes or other incidents.
“Coordinate with the military spouse to avoid overdrafts and pay credit cards,” Nordman said. “Automate bills during deployment. Be careful about binge spending in military liberty ports — and let’s not get into how I know that.”
Don’t flip out
Facing frequent relocations, rent, don’t buy. The days of buying and flipping homes in just a few years are over. That’s more of a financial headache than it’s worth.
“Short-notice military orders prevent planning,” Nordman said. “Dislocation allowance does not cover all transfer expenses. Commands don’t offer advance dislocation allowance, travel or basic allowance for housing — or military families don’t know about them.
“It’s a huge disruption to budgeting,” he said.
Military members can safely and securely access and manage their financial accounts overseas. As in the United States, be sure to use internet sites that have secure access — those designated https. Deployed people can check with their finance office for suggestions.
“Use the company’s financial app,” Nordman said. “Request a military active-duty alert on credit reports.
“Maximize autopilot deposits and bill pay before going on assignments,” he said. “Avoid unsecure public Wi-Fi. Use two-factor authentication logins.”
Save for emergencies
Even though service members have credit card debt, they still can save for an emergency fund.
Budget to pay down credit cards — more than minimum payments — while setting aside money for an emergency fund. This is a matter of discipline and perseverance — the same advice given to civilians.
“Track your expenses, minimize the waste,” Nordman said. “Pack a lunch. Sell your excess stuff. Work side-hustle gigs. No eating out until you’ve set aside $50 to $100 each month for a $1,000 fund. Ask the credit-card company for SCRA benefits.
“An emergency fund is essential, but it doesn’t have to be a big one,” he said.
Military spouses suffer when left to fend for themselves after the active-duty member leaves without passing along essential financial information. Finances are an important part of any relationship built on confidence and trust.
“My military spouse readers report poor career opportunities, state employment taxes, military family childcare, perpetual military pay problems, short-notice transfers, uncertainty in budgeting, confusion about retirement investing and tax-return preparation,” Nordman said.
As with other people, the word “taxes” make military families cringe.
“I know,” Nordman said. “Even when I do my own tax returns — with software — I still end up spending hours on research. Entrepreneurs absolutely need their own CPAs.”
Focus on now
Young, single-income families on a tight budget should made a cold, clear-eyed assessment of their wants and needs. Wants are long-term niceties. Focus on immediate needs, knowing better days will come.
“Track your spending and eliminate the waste,” Nordman said. “Build a $1,000 emergency fund. Avoid consumer debt. Consolidate student loans. Invest in a Roth thrift savings plan and Roth IRA early. Pack a lunch. Minimize dining out. Get qualified. Get promoted.”
When preparing to transition to civilian life, service members should start to consult with transition-assistance specialists years before retirement. Then they won’t have last-minute surprises.
For instance, transition from term, low-priced Serviceman’s Group Life Insurance because that deal is gone in civilian life.
“Prepare two years ahead, even if you plan to re-enlist,” Nordman said. “Attend military Transition-Assistance Program and GPS — goals, plans, success — with your spouse.
Go with spouse
To get well versed on programs, military members should attend Transition-Assistance Program classes several times.
“Lots of questions come out of the first TAP, and then the tools keep updating for the second TAP,” Nordman said. “Attending with a spouse is always a great inspiration for long, thoughtful conversations about life planning.
“We get more TAP questions from military spouses,” he said. “They tend to be questions that the military member should have already considered. Attending TAP together avoids lots of questions and unpleasant surprises.”
Military and state agencies are available for job searches. Don’t forget job fairs on and off base. Find out now how military skills and experience translate to well-paying civilian jobs.
“My favorite military Transition-Assistance Program is the LinkedIn group, Veteran Mentor Network,” Nordman said. “Over 125,000 veterans are helping servicemembers and other vets.”
Military finance specialists may not endorse civilian financial agencies or specialists, but they might have a list of those in the local area. Talk with others who have left the service about their experience and recommendations.
Nordman offered these sources for military financial information:
- Read Ryan Guina, a military veteran, writer and small-business owner.
- Visit The Military Wallet.
- Follow Kate Horrell, who helps military families make the most of their pay and benefits.
- Go to Military Dollar.
- See Military Money Manual.
- Visit Grumpus Maximus “where financial independence and pensions meet to create a better retired life.”
- Visit Military Life Planning.
- See articles on Money Q&A.
- Follow Jen Hemphill, the money confidence coach.
- See Her Money Moves, which relates personal experiences from military life.
- Join Facebook military personal finance groups.
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