Posted on Mar 6, 2023
Five tips for making the most of your money at every stage of service
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I’m lucky to have a career dedicated to furthering the financial health of the military and Veteran community. As a military spouse, I know it’s not easy wading through the flood of fiscal advice coming at us almost every day. At times, it’s overwhelming — even paralyzing.
Avoid information overload by developing a financial to-do list, and tackling items at your own pace. Seek guidance from trusted, credentialed and often free military- and Veteran-friendly sources and discard the rest. Set aside time during the year to plan your financial future, and secure the rewards at every stage of service.
As you do, consider these five tips and resources for making the most of your money — today, tomorrow and in the years ahead:
1. Get banked with no- or low-fee access to your money. By some estimates, hundreds of thousands of Veterans are “unbanked,” which means they don’t have access to a traditional checking and savings account. To receive the income and benefits they’ve earned, these Veterans must rely on costly government prepaid card services, which are susceptible to fraud, fees or mistakes. Or they receive benefits on paper checks, which can be lost in the mail, take a long time to arrive and be expensive to cash at nontraditional outlets.
There’s another way to get paid: Use the Veterans Benefits Banking Program (VBBP), an alliance of military- and Veteran-friendly banks and credit unions. Created in 2019 by the U.S. Department of Veterans Affairs (VA) and my employer, the Association of Military Banks of America (AMBA), VBBP makes sure Veterans and their spouses and families can find low-cost banking options.
VBBP-participating financial institutions are screened for their willingness to help you and other Veterans open a free or low-cost checking account. VBBP banks and credit unions will help you quickly receive, and efficiently manage, your money and can offer you other Veteran-specific financial products. With a bank or credit union account, you can get your benefits directly deposited into your account.
Details: https://rly.pt/3KUySRf
2. Take advantage of free financial and credit counseling services. Free financial and credit counseling is available from trained and credentialed professionals who understand the military and Veteran communities and their unique financial challenges. Access these trusted resources for service members and Veterans:
• Military financial counseling: If you’re on active duty or within a year of transitioning from military service, use Military OneSource to find a trained financial expert from the Defense Department’s financial counseling program or find one at your installation's family readiness center. Note that these professionals are credentialed to provide advice on budgets and money management, but they should refer you to a qualified institution to handle actual investments.
Details: https://rly.pt/3Yp4yBp
Veteran financial counseling: If you’re a Veteran, get a free credit or financial counseling session through the VBBP:
• Seek out a National Foundation for Credit Counseling-certified credit counselor for:
• Getting out of debt.
• Avoiding foreclosure or eviction from your home.
• Qualifying for a first-time home purchase.
• Seek an Association for Financial Counseling & Planning Education®- Accredited Financial Counselor® for:
• Learning financial information and guidance specific to your experiences and needs.
• Creating a budget, spending or savings plan.
• Making a life or career transition, such as to higher education, a new job or retirement.
Details: https://rly.pt/3IQ0GDy
3. Lock in retirement assets for your spouse and dependents. If you’re in the military and plan to serve until retirement or are retired now, protect your military retired pay assets for your dependents with the Survivor Benefit Plan (SBP). And if you didn’t elect to receive this valuable benefit upon retiring and want to revisit that decision, you’re in luck: The recently passed National Defense Authorization Act made 2023 open season for applying, which means you have until Jan. 1, 2024, to enroll.
Why do I recommend you pay the monthly cost to participate in this program? There are so many reasons! The main one is that unless you’re enrolled in SBP, your military retirement payments stop when you die. With SBP, your monthly pretax premium ensures that your survivors, including your eligible spouse and children, receive an inflation-adjusted income for the rest of their lives.
SBP monthly benefits top out at 55% of your military retired pay. That means they may amount to more than your eligible survivors receive through other benefit programs. For example, Navy Mutual points out that the surviving spouse or eligible child of an E-8 who covered their full retirement of $3065 could receive approximately $1685 per month from SBP, before any cost of living increases. In comparison, only $1,563 per month is provided through the VA Spouse Dependency Indemnity Compensation program. Also, VA survivor benefits are only available to eligible dependents under certain criteria, so there are no guarantees VA benefits would be available. Another feature of the SBP benefit is that if the cost of living goes up, SBP payments go up along with it.
For spouse coverage, SBP premiums are 6.5% of the amount you elect to pass down. Not only do these premiums come out of your pretax income, they tend to compare favorably to traditional life insurance premiums.
Details: There’s much more to this benefit, and so visit my RallyPoint page again soon for a more in-depth discussion on this topic (and other military-related financial information). Before open season ends, check out a recent episode of the “Military Money Show with Lacey Langford,” which can help you decide if SBP is right for your situation (https://rly.pt/3Jfc4u9).
Get an overview of the program at https://rly.pt/3mrJtJc and learn about open season at https://rly.pt/3SOiFiq
4. Make inflation work for you: Open a high-yield savings account. There’s very little to like about inflation. But there is one upside: Higher prices mean you earn more interest on money you have parked at the bank. If you can set aside some funds for a short period of time, consider opening a certificate of deposit account, which right now are generating as much as 4.5% in interest. In one year at that rate, a $50,000 sum would generate about $2,250. Details: Make sure you open an account with a reputable institution, such as an AMBA member bank. Find one near you at https://rly.pt/AmbahqBanks
5. Know that information is power: Get a free credit report, even every week. Through AnnualCreditReport.com, every American was already eligible for a free annual credit report. Now, due to a pandemic-era rules change, you can get reports from all three credit agencies every week if you want. Use these to spot identity theft, mistakes and other issues affecting your credit rating, all of which can affect the interest rate you pay for credit and can impact your life in other ways. Details: https://rly.pt/3hQMBbp
I hope that these tips help you boost your financial well-being and make the most out of the money you earned in service to our nation.
Learn more
• https://rly.pt/ambahq
• https://rly.pt/31E3qig
Avoid information overload by developing a financial to-do list, and tackling items at your own pace. Seek guidance from trusted, credentialed and often free military- and Veteran-friendly sources and discard the rest. Set aside time during the year to plan your financial future, and secure the rewards at every stage of service.
As you do, consider these five tips and resources for making the most of your money — today, tomorrow and in the years ahead:
1. Get banked with no- or low-fee access to your money. By some estimates, hundreds of thousands of Veterans are “unbanked,” which means they don’t have access to a traditional checking and savings account. To receive the income and benefits they’ve earned, these Veterans must rely on costly government prepaid card services, which are susceptible to fraud, fees or mistakes. Or they receive benefits on paper checks, which can be lost in the mail, take a long time to arrive and be expensive to cash at nontraditional outlets.
There’s another way to get paid: Use the Veterans Benefits Banking Program (VBBP), an alliance of military- and Veteran-friendly banks and credit unions. Created in 2019 by the U.S. Department of Veterans Affairs (VA) and my employer, the Association of Military Banks of America (AMBA), VBBP makes sure Veterans and their spouses and families can find low-cost banking options.
VBBP-participating financial institutions are screened for their willingness to help you and other Veterans open a free or low-cost checking account. VBBP banks and credit unions will help you quickly receive, and efficiently manage, your money and can offer you other Veteran-specific financial products. With a bank or credit union account, you can get your benefits directly deposited into your account.
Details: https://rly.pt/3KUySRf
2. Take advantage of free financial and credit counseling services. Free financial and credit counseling is available from trained and credentialed professionals who understand the military and Veteran communities and their unique financial challenges. Access these trusted resources for service members and Veterans:
• Military financial counseling: If you’re on active duty or within a year of transitioning from military service, use Military OneSource to find a trained financial expert from the Defense Department’s financial counseling program or find one at your installation's family readiness center. Note that these professionals are credentialed to provide advice on budgets and money management, but they should refer you to a qualified institution to handle actual investments.
Details: https://rly.pt/3Yp4yBp
Veteran financial counseling: If you’re a Veteran, get a free credit or financial counseling session through the VBBP:
• Seek out a National Foundation for Credit Counseling-certified credit counselor for:
• Getting out of debt.
• Avoiding foreclosure or eviction from your home.
• Qualifying for a first-time home purchase.
• Seek an Association for Financial Counseling & Planning Education®- Accredited Financial Counselor® for:
• Learning financial information and guidance specific to your experiences and needs.
• Creating a budget, spending or savings plan.
• Making a life or career transition, such as to higher education, a new job or retirement.
Details: https://rly.pt/3IQ0GDy
3. Lock in retirement assets for your spouse and dependents. If you’re in the military and plan to serve until retirement or are retired now, protect your military retired pay assets for your dependents with the Survivor Benefit Plan (SBP). And if you didn’t elect to receive this valuable benefit upon retiring and want to revisit that decision, you’re in luck: The recently passed National Defense Authorization Act made 2023 open season for applying, which means you have until Jan. 1, 2024, to enroll.
Why do I recommend you pay the monthly cost to participate in this program? There are so many reasons! The main one is that unless you’re enrolled in SBP, your military retirement payments stop when you die. With SBP, your monthly pretax premium ensures that your survivors, including your eligible spouse and children, receive an inflation-adjusted income for the rest of their lives.
SBP monthly benefits top out at 55% of your military retired pay. That means they may amount to more than your eligible survivors receive through other benefit programs. For example, Navy Mutual points out that the surviving spouse or eligible child of an E-8 who covered their full retirement of $3065 could receive approximately $1685 per month from SBP, before any cost of living increases. In comparison, only $1,563 per month is provided through the VA Spouse Dependency Indemnity Compensation program. Also, VA survivor benefits are only available to eligible dependents under certain criteria, so there are no guarantees VA benefits would be available. Another feature of the SBP benefit is that if the cost of living goes up, SBP payments go up along with it.
For spouse coverage, SBP premiums are 6.5% of the amount you elect to pass down. Not only do these premiums come out of your pretax income, they tend to compare favorably to traditional life insurance premiums.
Details: There’s much more to this benefit, and so visit my RallyPoint page again soon for a more in-depth discussion on this topic (and other military-related financial information). Before open season ends, check out a recent episode of the “Military Money Show with Lacey Langford,” which can help you decide if SBP is right for your situation (https://rly.pt/3Jfc4u9).
Get an overview of the program at https://rly.pt/3mrJtJc and learn about open season at https://rly.pt/3SOiFiq
4. Make inflation work for you: Open a high-yield savings account. There’s very little to like about inflation. But there is one upside: Higher prices mean you earn more interest on money you have parked at the bank. If you can set aside some funds for a short period of time, consider opening a certificate of deposit account, which right now are generating as much as 4.5% in interest. In one year at that rate, a $50,000 sum would generate about $2,250. Details: Make sure you open an account with a reputable institution, such as an AMBA member bank. Find one near you at https://rly.pt/AmbahqBanks
5. Know that information is power: Get a free credit report, even every week. Through AnnualCreditReport.com, every American was already eligible for a free annual credit report. Now, due to a pandemic-era rules change, you can get reports from all three credit agencies every week if you want. Use these to spot identity theft, mistakes and other issues affecting your credit rating, all of which can affect the interest rate you pay for credit and can impact your life in other ways. Details: https://rly.pt/3hQMBbp
I hope that these tips help you boost your financial well-being and make the most out of the money you earned in service to our nation.
Learn more
• https://rly.pt/ambahq
• https://rly.pt/31E3qig
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Edited 1 y ago
Posted 1 y ago
Responses: 5
The recommendations are missing the #1 tip for making the most of your money (for your future) ... maximize your retirement contributions!
For those that converted to the Blended Retirement System (BRS) or joined after 1 JAN 18, are participating in a traditional 401(k) plan in addition to a defined retirement (i.e., military pension) after 20 years.
When first enrolled, DoD enrolls you a 3% of your contributions automatically and automatically gives a 1% contribution (regardless of how much you contribute). However, you won't max out your matching contributions from them until you raise that to 5% (at 3% contributions, DoD matches 3% ... at 5%, they match with 4%).
At a minimum, make sure you raise your contributions to 5% - less means you are leaving DoD free money on the floor. However, if you can afford it, contribute up to the IRS maximum (that max is $22,500 in 2023) as it will grow tax free over your career.
---------------------------
https://militarypay.defense.gov/Portals/3/Documents/BlendedRetirementDocuments/A%20Guide%20to%20the%20Uniformed%20Services%20BRS%20December%202017.pdf
For those that converted to the Blended Retirement System (BRS) or joined after 1 JAN 18, are participating in a traditional 401(k) plan in addition to a defined retirement (i.e., military pension) after 20 years.
When first enrolled, DoD enrolls you a 3% of your contributions automatically and automatically gives a 1% contribution (regardless of how much you contribute). However, you won't max out your matching contributions from them until you raise that to 5% (at 3% contributions, DoD matches 3% ... at 5%, they match with 4%).
At a minimum, make sure you raise your contributions to 5% - less means you are leaving DoD free money on the floor. However, if you can afford it, contribute up to the IRS maximum (that max is $22,500 in 2023) as it will grow tax free over your career.
---------------------------
https://militarypay.defense.gov/Portals/3/Documents/BlendedRetirementDocuments/A%20Guide%20to%20the%20Uniformed%20Services%20BRS%20December%202017.pdf
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Great info, thanks for sharing!
For learning on the go, the MyNavy Financial Literacy app has training from MilConnect, links to banking and consumer awareness sites, retirement planning guides, and useful info for sailor at all levels. (Not sure if other services have similar apps, but still a good resource for military personnel)
For learning on the go, the MyNavy Financial Literacy app has training from MilConnect, links to banking and consumer awareness sites, retirement planning guides, and useful info for sailor at all levels. (Not sure if other services have similar apps, but still a good resource for military personnel)
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