Your Military Money Matters

Ed. note: This is cross-posted on the U.S. Department of Defense's blog. See the original post here.

Whether you’re a newbie recruit or an old salt, managing your money takes some time and attention. Despite the regular paycheck, it doesn’t happen on its own. Forgive the pun, but the effort will pay off.

As a service member, there’s basic pay, travel pay, hazardous duty pay, cost-of-living allowances and much more. Then there are deductions, bills, rent or mortgage payments, and somehow making sure there’s money to set aside for holiday overspending, unexpected expenses, college and retirement. Life happens. It might seem overwhelming, but help is available, free, and easy to access, no matter what stage of your military career you are in.

There are too many important reasons to list when it comes to taking charge of your finances. Your career is one reason. When your finances are in order, you’re able to focus on the mission.

Let’s get started.

This will only take a moment. First, we’ll discuss what help is available and then give some wave top info on some important “news you can use” about your pay and other entitlements.

Confidential financial help – There are three ways for a service member or their spouse to get credentialed, financial expert help so you can create a personalized budget and set long- and short-term goals in order to reduce debt and increase savings. It doesn’t matter if you want to build a plan, have a serious financial issue or just need a gut check, one of the following options is sure to meet your needs:

• Personal financial managers are available at installation family support centers.
• Your command can provide personal financial counselors for face-to-face sessions through the Military and Family Life Counselor program.
• Book a face-to-face or by telephone, confidential financial counseling through Military OneSource. This is the easiest, fastest path. Just call 800-342-9647 or visit the Military OneSource website.

If you are just starting out, having a financial plan and saving for the future may seem like “To Do” items for later on. But ask anyone who was born before 1975 and they will tell you it is never too soon to be financially fit. Conversely, it is never too late to start…especially if you suddenly find yourself in a financial pickle.

OK, that’s the free and easy help. Now some money news you could use;

1. The Thrift Savings Plan is a great way to save money. This long-term savings plan is painless, because money is automatically deducted from your paycheck and moved into investment funds. It’s simple to use, there are variety of funds to fit your investment style and goals, and the annual costs are about the lowest you’ll find anywhere. The Thrift Savings Plan is where you start small and build wealth over time. It’s the real deal.

2. An allotment is a different kind of financial tool. Think of the old infomercial phrase, “set it and forget it.” Here’s what I mean: let’s say your short-term goal is to purchase a home or create an emergency fund. Military allotments help get you there by automatically debiting your paycheck before you get paid, set in amounts you determine, making it easier to reach your goals. It sounds like a mind game, but let’s face it, it’s easier to not spend money if it first detours to a lender or a savings account before it hits your wallet.

Good news: as of January 1st, allotments cannot be used to pay for purchases, leases or rental of personal property. This to protect you from dishonest lenders who may want to take advantage of these guaranteed payments.

Speaking of protections –

3. The Military Lending Act also protects you and your money from lenders who may want to take advantage of your steady paycheck. The Military Lending Act caps interest rates on some forms of consumer credit (like short-term payday, vehicle title and tax refund anticipation loans) that the Department of Defense has decided are harmful to active duty members and their families. The Department is considering changes to definitions applied to the Military Lending Act that would cover all payday and car title loans, as well as, installment loans, pawn shop loans and credit cards. Learning about protections like these can help you keep your hard-earned cash and invest it in ways that really benefit you and your family.

There’s another reason for taking charge of your finances – it’s your hard-earned money. And you owe it to yourself to get the most out of it. Personal financial counselors can help you take the important steps, answer your questions, get you started with a spending plan, and help you steer clear of scams and pitfalls. Period. Dot.

Rosemary Freitas Williams is the Deputy Assistant Secretary of Defense for Military Community and Family Policy.