10 Tips for Managing Money in the Military

May 12, 2022

Military personnel and their families can encounter unique circumstances when it comes to managing money and planning for what comes next.

Serviceman holding his smiling child in the air

Managing your money wisely can help you save for your future so that you can focus on serving our country while maintaining your financial security

Find a Banking Institution to Help You Manage Money While Overseas

Online banking has made it easier for you to monitor money and transfer funds while you’re deployed. However, it can be difficult to log into your investment accounts while you’re stationed overseas because of the anti-fraud security measures used by some financial institutions.

To learn about the process of managing money overseas, you can:

  • Check with your financial institution prior to deployment or use a military-friendly company, such as USAA, Navy Federal Credit Union or another credit union with a military membership.
  • To find credit unions with a military field of membership, use the National Credit Union Administration’s Credit Union Locator or Research a Credit Union tool.

Research the Housing Market Where You Will be Stationed

In each new location, you’ll decide whether to rent or buy your home. If you choose to buy, you can either sell your home when you move away or rent it out once you’re reassigned.

Make sure to research the housing market where you’ll be stationed before making your housing decision to understand which option is best for you.

Create a Budget

By setting up a basic budget, you’ll be able to make sure you consistently have enough money saved to pay your monthly bills. Start by tracking:

  • How much money you are bringing in after taxes.
  • What you spend on regular expenses, such as cell phone, car payments, car insurance, gas, internet, cable and more.
  • What you spend on irregular expenses, such as haircuts, potential uniform expenses and eating out.

After a few months of tracking, you’ll have a good idea of how much you can afford to comfortably spend while still having money left over.

Build an Emergency Fund

In addition to saving for future expenses you can predict, it’s best practice to start an emergency fund to prepare yourself for the unexpected, such as home damage, sickness or unemployment. You should keep this money in a regular savings account for easy access in case of emergency.

Save for Future Expenses

In addition to an emergency fund, you will want to save money for long-term expenses such as a buying a new home, paying for college or a wedding. Consider creating a dedicated savings account for these long-term expenses, separate from your other savings, so that you don’t have to dip into it to make your regular monthly payments.

Avoid Going into Debt

Stick to your budget to avoid getting into debt. Debt can negatively affect your financial future, and excessive debt can result in you being discharged from the military.

It’s always best to wait until you can afford a purchase rather than going into debt.

Be Careful with Credit Cards

Credit cards can quickly get you into financial trouble if you start charging more than you can pay off each month. Keep an eye on your charges throughout the month to avoid this scenario.

Using less of your credit limit can also benefit your credit score.

Build a Good Credit Score

Responsible use of credit and credit cards not only helps you stay in control of your monthly expenses, but it can also help you establish a good credit score. Building a good credit score could help save you thousands of dollars later in life, because you will be able to obtain loans at more favorable interest rates.

Start Saving for the Long-Term

The military pension plan is a generous retirement system, but you must be in the military for at least 20 years to qualify. If you are not planning to stay in the military for that long, it’s a good idea to start saving and investing for your future now. You can do this by:

  • Opening a Roth IRA.
  • Participating in the Thrift Savings Plan (government version of a 401k plan).

Even a few hundred dollars in savings per year can grow into thousands of dollars by the time you reach retirement. Start saving early to benefit in the long run.

Use Your Military Bonus Wisely

Many new recruits or military members who reenlist receive a bonus. Before you spend the money, you should consider:

  • Debts you need to pay off.
  • Bills, emergency funds and other needs.

It’s often a good idea to put a significant portion of your bonus toward these needs first before spending your bonus on your wants.

For more information and resources on budgeting for homeownership, and for details about the VA home loan program, visit My Home by Freddie Mac®.

Military service member with kids

CreditSmart®: Military

Designed for active service 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 program.

Learn more