We come from different branches of service and are stationed in different places, but there is certain continuity to the military community. We all face similar financial challenges (most of them unique to the military world) and we all must figure out a way to overcome them.
Here are common financial hurdles that military families face.
I don’t know how much money we need to PCS.
While you may not have pinpoint orders months in advance, most folks know when they are getting close to a PCS. And the planning (and saving!) should begin way before that date. Some military families have a permanent “PCS Fund.” Many of the specific costs may depend on whether you are heading OCONUS or CONUS, but there are some basic considerations that are the same for everyone.
There are several great online resources to help you come up with a PCS budget. You need to make sure you are aware of all your PCS entitlements. While your service member is eligible for DLA (Dislocation Allowance), be leery of taking advance pay – DLA is yours to keep, but advance pay will be coming out of your paycheck for months afterward.
Look for creative ways to save during your PCS. For example, on our recent PCS back to the States, we used up our allotted days of temporary lodging allowance and still were not able to occupy our new rental house. Rather than pay out of pocket for a local hotel, we opted to get a one-week rental of a time share unit through Armed Forces Vacation Club. We had a full kitchen and resort-style amenities for about the quarter of the price of a week’s stay in a hotel.
Pro-tip: Keep all your receipts when you move because you don’t have to itemize to deduct moving expenses that weren’t reimbursed by the government when filing your income taxes.
I’m worried that we will have to live on one salary at our next duty station.
Before you panic, do the math; if you don’t have one already, create a spending plan. Can you survive on one paycheck? Remember to take into account that if you don’t work, you will probably spend less on clothing, child care, transportation costs, taxes and eating out.
If living off of military pay alone isn’t feasible, figure out how long you can survive on one paycheck to give yourself some wiggle room to find a job. Start saving now by cutting back wherever you can while you simultaneously strategize for your future job hunt.
I don’t know whether to rent or buy a house at my next duty station.
Every market is different, so this is going to be something that families will have to reassess each time they get orders. While there are plenty of rent vs. buy calculators out there, such as this one, most of them don’t take into account that most military families move every 2 to 3 years and because of the VA home loan guarantee don’t have to put down a large (or any) down payment.
So you will have to weigh the pros and cons. If you decide home ownership is not for you, you may also have to make a choice between living on post or renting in the local community.
If you decide to buy, there are steps you should be taking right away.
I don’t know if we’re saving enough.
This one isn’t just something military families experience. But in order to know if you’re saving enough, you have to know what you are saving *for*.
I find most people don’t have concrete financial goals, and, to paraphrase the Cheshire Cat in “Alice in Wonderland,” if you don’t know where you’re going, then it doesn’t much matter which way you go.
Most of the time that panicked feeling that you haven’t saved enough stems from not having clear-cut financial goals. Ignorance is not always bliss.
It’s typically suggested that you save 10% of your net income, but depending on your personal goals, you may need to save more. An emergency fund of at least $1,000 comes first, and then everything else depends on personal preferences.
One thing is for sure, kids can borrow for college, but parents can’t for retirement.
Military spouses should also make sure that they have retirement savings in their own right, even if they are not working. There are some good retirement calculators out there, and if you need more guidance, consider visiting a free financial counselor at your family service center. MilitaryOneSource also has free financial counselors on hand.
Pro tip: Write down some near (less than 5 years out) and long-term goals and share your progress with a friend. In a study conducted at Dominican University in California, people who wrote down goals and kept pals informed were more than 70% successful in attaining them.