6 Money Issues I Wish I Had Considered When I Joined the Military

A financial coach shares the money skills she learned in the U.S. Air Force.

Hindsight is 20/20. Looking back on your life, there will always be areas you wish you had handled differently.

By joining the US Air Force, I had many opportunities to start my financial future off right. Unfortunately, I didn’t take the time to understand or find out about some of those opportunities.

These are the six things I wish I’d known about money and the military from day one.

1. Allotments for Saving

I’d wish I’d known to start making my savings automatic by using allotments.

An allotment is a distribution of a set amount of your pay to the person or account you determine through MyPay. A great advantage of using allotments is that you can set up a certain amount to be automatically sent to your savings account each month. By doing this, you can adjust to not having that money to spend each month while you build your savings.

2. Thrift Savings Plan and Blended Retirement System

I wish I’d known there was a way to start saving for retirement the day I joined.

The Thrift Savings Plan (TSP) is the government version of a 401(k). It allows you to save money for retirement within a tax-advantaged account. If I had started my retirement savings at 18 or even 20 years old, I would have had a great head start. The Department of Defense (DoD) is doing something else to help qualified new recruits save for their future as well. It’s called the Blended Retirement System (BRS), and it does just what it sounds like—it blends the old retirement system with the TSP. There will still be a pension after 20 years of service, but it will be a reduced amount. To adjust for this, the DoD will now match member contributions to their TSP up to 5%.

3. Extra Pay

I wish I’d known to make a plan for what to do when I received extra money.

When you’re serving, you may have to go on a temporary duty (TDY) assignment or a deployment that will increase your pay. Promotions will also increase your income. When you receive increases in income, you should make a plan for what to do with that extra cash. For example, you might take half the money you receive from a promotion to increase your savings and the other half to increase your quality of life. By having a plan for increases in income, you’ll reach your financial goals faster and easier.

4. Frivolous Spending

I wish I’d known that I would have nothing to show for all my frivolous spending.

When you’re 19, you have no idea how unimportant some of your spending can be. All the clothes, club cover charges, and gas money add up quick. When you look back, you’ll wish you put a larger portion of your money in savings instead of spending it on things that won’t last or be relevant 20 years from now. Spending money on experiences can be a rewarding part of life, but you’ll want to think critically about which experiences you decide to spend your money on when it could impact your quality of life later on.

5. Free Credit Reports

I wish I’d known what the heck a credit report was and why it was important to my financial future.

Your credit report is your good name. Having negative information on it will lead to lenders charging you more to borrow money or, even worse, not loaning you money at all. Many servicemembers don’t realize the significance of on-time payments and not taking on too much debt until they’re already in the thick of it. And an issue with your credit report can be an even bigger problem when you are a servicemember. An excessive amount of debt can result in the loss of your security clearance—or never being able to obtain one in the first place. Take the time to gain basic knowledge of your credit report and get a copy every four to six months to make sure everything is accurate. You can check your credit report for free on Credit.com.

6. Leave and Earnings Statements

I wish I’d known to check my LES for errors every month.

We all know mistakes happen. So it shouldn’t come as a surprise that mistakes happen on servicemembers’ leave and earning statements (LES) too. Whatever the mistake, it’s compounded when it isn’t caught in a timely manner. If you don’t pay attention and you’re paid more than you’re due, the Defense Finance and Accounting Services (DFAS) will take that money back in the next pay period. If you’ve spent the money, you’ll still be expected to pay it back even though it was a mistake. If your leave balance is higher than what you’ve actually earned, you may find out you don’t have enough leave when you try to take a vacation. Check your LES every month to ensure all the information is accurate.

These are six things I wish I would have known about since my first day in the military. Hopefully, you can learn from my experience and use them to achieve your financial goals. For even more tips and tricks, visit Credit.com’s Personal Finance Learning Center.

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How to Maintain Good Credit While Serving in the Military

Budgeting during deployment or transfer to a new assignment might be on the mind of many military service members. What might not be are credit scores and how they could impact the costs for everything from a credit card’s annual percentage rate, or APR, to a new mortgage.

Here are four tips for how to maintain good credit while serving in the military.

1. Save When You Can

Whether you’re on active duty, in the reserves or are returning from tour, keeping a savings account may help you avoid going into debt now or down the road in an emergency. (Consider these five mistakes to avoid when you start saving.) 

“The best advice is to make savings a priority while avoiding unnecessary spending,” Bruce McClary, the vice president of communications for the National Foundation for Credit Counseling, said in an email. “Adequate savings will help avoid financial emergencies that would otherwise lead to unmanageable debt. Savings also helps during periods of transition from military to civilian life.” 

While you’re serving can be a good time to save, as some of your expenses may be covered by the military. This can help you save for emergencies or hefty future expenses, like raising a family or buying a home. (Though some veterans can qualify for 0% down VA home loans.)

2. Communicate With Those Back Home

If you are sharing an account with someone at home, it’s a good idea to discuss payment plans and spending before you leave so everyone’s on the same page. But the communication shouldn’t end there.

“Staying in touch with joint account users, such as spouses, can help avoid any surprises while keeping accounts paid as agreed,” McClary said. “At the same time, you should use all means available to monitor account activity online whenever possible.”

3. Use Online Resources to Your Advantage

Depending where you are deployed, you may or may not have frequent internet access. However, if you do, there are several online tools to help you maintain good financial habits while serving in the military, like online banking and budgeting tools.

“Those serving on active duty can set alerts that help them keep a closer eye on how an account is being used, giving them instant access to charges and balances,” McClary said. “Payment due date reminders can also be helpful, along with automatic payments.”

Having a late payment can subject you to late fees, and missing one altogether can potentially harm your credit score. So even if you have automatic payments set up, it’s a good idea to monitor those and ensure they go through as scheduled.

“If automated payments have been arranged, set a schedule where you can check to see if they were processed correctly,” McClary said.

If you don’t have internet access while overseas, consider having a trusted family member check your accounts to make sure any automatic payments are processed correctly and on time.

4. Keep an Eye on Your Credit

“Credit reports should also be monitored on a regular basis,” McClary said. If you have internet access, you can get your free credit reports once a year on AnnualCreditReport.com, and you can view your free credit report summary, updated each month, on Credit.com. Should you find any inaccurate information, you can dispute the errors on your credit reports with the credit reporting agency or agencies that have it wrong.

Members of the military who are deployed can also consider placing an active duty alert on their credit reports.

“An active duty alert remains on the report for one year,” Rod Griffin, Experian’s director of public education, said in an email. While the alert only lasts a year, it can be renewed. “It notifies creditors that you are a member of the U.S. military and that you are currently on active duty,” he said. “An active duty alert does not require a lender to contact you directly to get your approval before granting credit in your name, but it does enable them to take appropriate action to protect your identity.”

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

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