The Importance of Financial Literacy for Veterans

The Problem:

2023 saw a spike in the inflation rate in September, accounting for a 3.1% rise in the prices of daily goods such as gasoline and groceries. Synonymously, the wages seen in the military community have remained stagnant at $53,000. The current cost of living in states such as California has risen to an average of $4,500 on rent alone. The increase in inflation seen across the board in the United States is only expected to become worse, given the numerous conflicts across the globe such as Russia/Ukraine and Israel/Palestine. Despite the growing fears of a spike in inflation during November, many veterans continue to suffer from the inability to support their families following their retirement.

In 2022, it was estimated that nearly 620,000 veterans were homeless across the U.S., accounting for 23% of the homeless population. This is an alarming statistic, given that 4 years ago, roughly 15% of the homeless population consisted of veterans. As inflation continues to rise, the cost of living in states such as California, New York, and Florida has risen by 12%. Additionally, Veterans are twice as likely to become homeless due to the age at which they join the military, without being able to properly receive a college education.

Education:

87 percent of members who join the military normally fall between the ages of 18–20. Therefore, this statistic signifies that soldiers lack an education past high school. To date, financial literacy is not a requirement set on a Federal level and is solely subject to choices made by the state education system. Therefore, many high school students are left without the resources to be able to budget and look after their finances. Once a soldier retires and becomes a veteran, they are still left with the education they received from high school. Veterans will be left without the resources to be able to manage their finances and support their families. Many 18-20-year-olds who sign up for the military have not yet likely owned their own household and have not yet stepped into a new financial world of their own. Doing so limits the amount of information that veterans have access to, following their work in the military.

Health Insurance:

Veterans who do not remain in the military for 20 years will not qualify for government healthcare. Due to the inability to be able to receive health insurance, many veterans have to find new jobs that can cover their medical insurance expenses, which can be especially high if they suffer from medical complications that arose during their role in the military. Doing so only continues to build pressure on veteran’s families and their spending ability as well. It is important to note that many veterans cope with PTSD and may have injuries that prevent them from working. These situations are not covered by the government and can result in additional stress on one’s spouse, requiring them to obtain a job if not already doing so.

Returning to Civilian Life:

In addition to requiring health insurance, many veterans find it stressful to adapt to civilian life. Upon retirement, many veterans want to take their time to spend with their families but are also introduced to the issues in civilian life. Budgeting is a large aspect of civilian life that many veterans have not yet been introduced to and struggle with as a result. Additionally, taxation rates are still applicable to veterans in states such as California. These financial burdens only add more stress to veterans upon their return back home. Additionally, a large concern for veterans is targeted predatory loans directed towards veterans. For example, many veterans have been constantly asked to refinance their homes and acquire new loans with “lowered” interest rates, despite this not being the case. These loans are what account for thousands of veterans and their families losing their homes and hundreds of thousands of dollars in debt.

Potential Financial Solutions:

While the situation surrounding veterans is slowly becoming worse given the economic implications of the 2020-2023 inflation period, there are still potential solutions to solving the economic disparity seen between veterans and the general public. For example, opening mandatory classes within each branch that require troops to receive both financial and banking education is necessary to ensure the future success of veterans and their families. To date, many of the U.S. military branches provide these courses but are not emphasized during a troop’s experience in their respective branches. Additionally, instituting financial education courses within high school can aid future members of the military and their future spouses and families. Financial education is not a subject that is solely limited to members of the military but is vital for all citizens, regardless of their plans. The cost of living across states such as California is 42% higher than the national average and requires that veterans utilize efficient budgeting and financial planning. These solutions can help veterans and their family's future as well. College planning and retirement plans should be emphasized for veteran families to better the success everyone within the U.S. economy can enjoy.