How to Budget Your Finances as a Non-Active Duty Military Family

Military families, whether those with a servicemember on active duty or in the reserves, confront unique financial challenges—making additional support and planning important. In fact, nearly 81% of military families report their finances have caused stress in the preceding 12 months.

Someone may be placed on non-active duty for the short term due to a transition period, or long term as a member of the reserves. For servicemembers leaving the military but continuing in the reserves or going on non-active duty for a short while, good financial support involves things like creating financial goals, paying off debt, leveraging government and employer resources and saving for the future.

As a leading employer of military veterans and spouses, Synchrony prioritizes and supports military families with benefits like our Military Spouse Employment Partnership.

Financial Challenges Faced by Military Families

Family members of people who serve in the U.S. Armed Forces face unique financial challenges, including:

  • • Frequent relocations and housing cost changes
  • • The need to budget properly for deployment or separation allowances
  • • Finding ways to maximize military benefits for the entire family
  • • Military spouse unemployment rate of 21%2
  • • Lack of civilian-level support

By following the steps below, military families can chart a course for better financial management.

1. Set Financial Goals That Stick

To prioritize for the short and long term, start building awareness of your financial situation right now, including debts and existing savings. Consider it like looking at your GPS before heading out on the road.

Pay down debt

As many as 91% of military families have at least one credit card, compared with only 69% of the civilian population.3 Military families are also more likely to carry higher balances than their civilian counterparts.3

List out all one-time and revolving debts, noting the interest rates for each one. Pay off high-interest debts like credit cards first.

2. Set Up an Emergency Fund

Once you remove debt, build up an emergency fund to cover unforeseen expenses like automobile damage, pet health needs or appliance maintenance. Studies reveal that just over half of military servicemembers have an emergency fund.4 Start with a small goal of saving $1,000 for emergencies, but try to build up to several months of household costs.

    Set savings goals
    Once you attain these short-term goals, transfer your financial attention to budgeting for major life events like:

    • A wedding • Saving for a down payment on a house • Having children • Retirement
      Use the bucketing approach to break up your savings. You can use several bank accounts or sub-accounts within your main checking or savings account to disburse savings toward particular purposes. These can include short-term savings goals like a trip, or long-term goals like retirement.

    Using automated savings transfers might also make it easy to keep on top of your goals.

    3. Learn How to Budget for Military Families

    A basic budget for military families comprises awareness of all money coming in and going out, with caps set for each area of life. You can try adopting a zero-based budget, which means designating every cent you earn to a certain job in your budget. For instance, you can split down your spending into categories such as:

    • Housing (rent or mortgage) • Groceries • Utilities • Subscriptions • Medication/healthcare • Entertainment • Transportation (gas, auto payments, bus passes, etc.)
    • Savings/investments
      Active duty families, including U.S. Armed Forces Reserves members called up to service, may need flex spending budget categories. For example, most military families migrate to new duty stations during “permanent change-of-station (PCS) season” from mid-May to mid-September.5

    These relocations bring up many new expenses, such as:

    • Fees for cleaning and moving out of a current rental home • First and last month’s rent and possible pet deposits in new homes • Gas to drive personal vehicles to new duty stations • Hotels or other travel stops during long-haul moves • Electric/utility deposits • Continued mortgage payments or utilities, pool care and lawn care on a current property until it rents or sells
      Find software or programs that assist make budgeting easy, such as Mint or YNAB (You Need a Budget). Once you have a decent handle on your expenditures, explore more advanced financial tools like Kubera, which provides a dashboard of your net worth.
    1. Tap Into Government Benefits for Military Families
      Every family should know about all available government benefits and maximize them to the best of their ability. This includes military salary, bonuses, Basic Allowances for Housing, healthcare through TRICARE and education/tuition support.

    Full-time military servicemembers receive paid based on their years of service and rank.6 The whole monthly compensation is split in half, for a total of two monthly pay installments. Reserves personnel receive drill pay based on their years of service, rank and location.7

    Active duty servicemembers who do not use government-provided housing (such as those not living on post) are entitled to receive a Basic Housing Allowance.8 This quantity varies from one person to another. Servicemembers also get a Basic Allowance for Subsistence (BAS) in line with the annual food cost index. Different BAS pay rates apply for enlisted members vs. officers.9

    Your situation may also qualify you for additional benefits, such as:

    • A Basic Needs Allowance if your household income falls below 150% of the Federal Poverty Guidelines10
    • Clothing Allowances for uniform purchasing and maintenance11
    • Dislocation Allowances for partial expense reimbursement for required moves12
    • Family Separation Allowances to support families of servicemembers who go on an unaccompanied tour of duty13
    • Overseas Cost-of-Living Allowances14 or high-cost Continental United States (CONUS) Allowances15
      TRICARE offers healthcare for servicemembers and their families. However, different bases may vary in terms of access to care and quality of care. Synchrony employees with experience as military wives indicate that they sought out supplemental healthcare through their own careers to assist bridge the gap.

    5. Get Your Affairs in Order

    Military spouses should also prepare to self-advocate by identifying their own career goals and getting to know their human resources specialists at work. Synchrony team members advise that this can help you plan for your future and help others perceive you as more than just a servicemember’s dependent.

    Talk with financial advisors about insurance protection and estate arrangements. At a minimum, you need life insurance, a will, a power of attorney and healthcare directives.

    Look into life insurance possibilities
    Life insurance can help cover expenses—such as income replacement, mortgage payback or college tuition costs—if something happens to you.

    Many government or military-sponsored benefits give outstanding coverage at less expenditure compared with civilian options. For example, with Servicemembers’ Group Life Insurance, you can purchase a maximum of $500,000 in coverage for your family in increments of $50,000.16 You might also wish to obtain extra private life insurance for greater financial necessity or to assure you’re locked into the lowest rates should you ever leave the military.

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