With Memorial Day right around the corner, and in honor of Military Appreciation Month, we’re recognizing those in the military as well as their families. Military members and their families face one-of-a-kind challenges, which make dedicating time to personal finance a challenge.
Luckily, there are special tax breaks and other benefits unique to service members. Here are four tips to take advantage of potential benefits and simplify your military family’s personal finances.
Tip #1: Focus on Retirement Savings
The Thrift Savings Plan is one way to save for retirement that’s specific for military members. Keeping investment costs as low as possible is easier said than done. But the TSP account has several low-cost investment options that help keep things really simple, and inexpensive.
You may also have access to a Roth TSP, which acts similarly to a Roth IRA but without income restrictions. By contributing to a Roth TSP, you don’t lower your taxable income now, but you will be able to withdraw the money tax-free when you enter retirement.
Tip #2: Save with High Interest
The Savings Deposit Program allows eligible personnel serving in designated combat zones to deposit up to $10,000 and earn up to 10 percent in annual interest.1 This can be an effective way to get a savings boost for your future.
By comparison, it’s not uncommon to find savings accounts at various banking institutions that offer less than one percent in annual interest rates.
There are some more qualifying details that need to be met in order for you to be eligible for this savings program. But, if eligible, this is one of the best financial perks available to military members and their families.
More information on this useful incentive can be found here!
Tip #3: Take Advantage of Your Military Education Benefits
The Post-9/11 GI Bill covers the full cost of in-state tuition, up to 36 months, plus housing fees and $1,000 a year to use for books and supplies.2 You can even transfer these benefits to your spouse or children if you don’t plan on using them yourself.
The cost of higher education has only increased over the last two decades or so. But a college degree is invaluable. This combination of rising costs and rising value makes these education benefits even more enticing.
Tip #4: Low-Cost Life Insurance
Backed by the Department of Veterans Affairs, the Servicemembers’ Group Life Insurance protects your family with low-cost term life insurance coverage. If you are an eligible service member, you may be automatically enrolled in this program.3
Depending on your status or branch, you may have other life insurance options available to you as well. If you haven’t already, you’ll want to review your options and determine whether or not your coverage is up-to-date.
It’s important for everyone, especially families, and especially military families, to be covered by life insurance. It doesn’t have to be complicated, term life insurance should be appropriate for most folks. So make sure that policy is in place and up to date!
Check out one of our recent posts about Reevaluating Your Insurance Needs.
Aside from specialized programs and offerings, there are a few things every military family can do to help get or keep their financial standings in order.
Like any mission, success begins with articulating goals you want to pursue. Make sure they’re measurable, attainable and timely.
Pay Yourself First
Determine how much money you need to set aside to reach your savings goal, deduct this amount from your paycheck and budget yourself to live within the limits of what remains.
Establish an Emergency Fund
Uncertainty marks the life of military families, so be sure you have an emergency fund that allows you to be as prepared as possible for these changes.
Control Your Debt
Indebtedness is one of the enemies of financial independence. Focus your efforts on paying down high-interest debt, like credit cards or personal loans.
As you think through your financial goals, remember that taking action today is your first and most important step. Take advantage of all your unique benefits and opportunities, so that you and your family can live your best financial life.
We hope this helps all the military families out there get on the right track financially. It is just a small token of our appreciation for our service members. Thank you for all you do for our communities, and our country as a whole.
Happy Memorial Day!