Wes Jarvis* recently visited the Tiny Town branch location in Clarksville, Tennessee. He was looking for assistance with managing his finances. Having recently left the Army, he was concerned that the change in income and benefits with his new civilian career might prevent him and his wife from living the lifestyle they enjoyed during his time in the military.
Like many of the roughly 250,000 service members leaving the military every year, transitioning to civilian life is an exciting time filled with opportunities. If you’re going through a similar transition, chances are, you’ve spent many hours considering what career to pursue, where to live and filling out piles of paperwork. It’s also an opportune time to take key steps for financial success after service.
Make a budget. At least at first, money can be tight. It’s likely that your living expenses will increase because you’ll leave your tax-free allowances, shopping at the commissary and Tricare behind. Take time to formulate a household budget based on your new circumstances. Keep in mind that there may be new expenses you haven’t had to consider before, such as the full cost of housing and health insurance.
Cut any high-interest debt. Sit down and take a closer look at your financial situation. Identify where it may be difficult to keep up with current payments and find out available options to simplify your monthly loan payments.
Wes discovered one of his vehicles had considerable equity, which could be refinanced. By refinancing that auto loan, he could use the extra cash to pay off one of his other vehicle loans. He also saved $170 per month, ultimately putting more money back into his wallet.
Figure out your next career. Wes knew that starting his employment research a year or more before leaving the service was essential. Fortunately, many free career resources are available for military members.
The Department of Veterans Affairs or a nonprofit organization like Hire Heroes USA provides veteran employment resources and assistance. Military.com also offers access to a long list of veteran-friendly employers and free employment master classes in its Veteran Employment Project. Some career paths may require additional education, so take advantage of your GI Bill benefits.
Consider your health insurance. Unless you’re retiring from the military after at least 20 years or have medical retirement, you’ll no longer be covered by Tricare. Veterans have access to VA health benefits, but these benefits typically don’t cover family members. If offered, joining your new employer’s health-care plan is usually most cost-effective.
Finally, lay out your savings plan. Many military families are focused on tracking their finances more closely. According to a Navy Federal Credit Union survey, 77% of military households picked up at least one financial habit over the past year, such as reducing daily spending and establishing an emergency savings fund. For active duty and veterans, 32% and 23%, respectively, said they were most proud of increasing their savings.
Define what you want to accomplish in civilian life -- whether it’s saving to buy a home, pay for school or contribute to retirement -- and create a timeline for achieving for these savings goals. Connect with your trusted financial institution about what options will work best for your future.
At Navy Federal Credit Union, We’re Always Here to Help
Visit our Military Life Resources for tips on financial readiness, getting ready for deployment and relocation, and easing your transition to civilian life.
*Name has been changed to protect the identity of the Navy Federal Credit Union member.