3 things military personnel and veterans need to know about their finances
Military families are not without challenges when it comes to financial planning. However, veterans and active military members can establish, grow, and protect their long-term financial livelihoods, even in the face of frequent moves, deployments, or other uncertainties.
Here are three steps you can take to ensure financial stability for you and your family.
1. Establish your finances
Arrange and clarify your documents and relationships. You must have a solid understanding of your financial, administrative and legal affairs and be able to quickly access up-to-date documents. You should also be aware of your bank or credit union’s active duty policies, as you will likely need to access your funds overseas or outside of traditional banking hours.
Create financial goals early. Once you know what financial goals you’re working towards, you can learn and apply strategies to manage money during deployment, create future savings, and avoid debt. By establishing a budget, you will have a good idea of how much you can comfortably afford to spend on regular and irregular expenses while still having some money.
Learn the basics of credit. Your credit score and accompanying credit report show that you can manage your money responsibly, and it tells lenders how likely you are to pay off your loan obligations, such as a mortgage. Without good credit, it’s harder to save money, build financial security, or own a home. If you don’t have credit, there are several steps you can take to start building it.
2. Increase your finances
Once you have established a financial plan, the next step is to execute it. Managing your money wisely can help you save for your future so you can focus on service while maintaining financial security.
Here are some strategies that will prepare you for big purchases down the line:
- Continuously putting money into savings.
- Responsible use of credit and debit cards.
- Use your military bonus wisely.
When you’re ready to make a big purchase, having money saved up, a higher credit score, and less debt will help you find more favorable loan terms.
If you feel financially ready to buy a home, there are several loan programs designed for military and veterans. This includes a VA home loan, an offer that helps make housing more affordable for eligible veterans.
If you have questions during the loan process that your lender cannot answer, you can contact Veterans Affairs through your local VA Loan Center. Find contact information for your regional loan center.
3. Protect your finances
Protecting what you’ve earned and what you’ve bought is a crucial step in your financial journey.
Save for emergencies and retirement. In an ideal world, you would aim to save 15% of your income each year in a retirement or other savings account. It is also important to set aside money each year in case of emergencies or additional expenses caused by a deployment.
Keep your insurance up to date. Make sure your home or tenant insurance policy is up to date in case you deploy, and let your insurance company know if your residence will be unoccupied while you’re away. You will want to have adequate coverage for your valuable personal property.
Beware of financial scams. Unfortunately, service members are prime targets for financial criminals trying to take advantage of your frequent moves. Learn to recognize and protect yourself from financial scams, including predatory lending, insurance and investment scams, identity theft and affinity fraud.
For more information and resources on budgeting for home ownership and for more details on the VA Home Loan Program, visit My Home by Freddie Mac®.
Designed for active military members and veterans, the CreditSmart Military Financial Readiness Module is a financial education resource that can help you learn how to manage your money, avoid financial schemes that target military families, and understand the VA home loan.