Financial Planning Tips for Military Families Before and During Deployment

Having spent more than a decade on active duty and having been deployed on multiple occasions, I’ve learned from each period of family separation.

The ability to embrace the unknown, control what can be controlled and ultimately adapt to change are critical components to the success of a well-constructed military plan. These same attributes also happen to be the keys to financially preparing for a military deployment.

Below are a few ideas for those who might face similar periods of extended time away from home in support of our national security.

Before Deployment

Before you develop a Specific, Measurable, Achievable, Relevant and Time-Based (S.M.A.R.T) budget, it is critical to complete a financial plan to establish who will be responsible for paying each bill. The plan will also identify the source of funds that will be used to pay bills. A recommendation: Using direct deposit and automated bill pay or providing a valid power of attorney to a trusted person are good ways to mitigate potential bill-paying issues.

If you have debt, have a clear view of how much you owe. Know the interest rates for each of your debts, how much you are paying monthly, and how long it will take to pay off your debts. Setting up short-term goals, such as paying off your credit cards or creating an emergency fund are ways to get started.

To help meet your savings goals, familiarize yourself with all special pay or entitlements that might bolster your bottom line while deployed. Consider setting aside some of the extra deployment income such as the following to pay off debt or build up savings:

• Per diem pay
• Family separation pay
• Tax-exempt combat zone pay
• Imminent danger pay
• Hostile fire pay

Lastly, explore if the Servicemembers Civil Relief Act, which is designed to reduce interest rates on existing loans, will allow you to save money that would otherwise be used to pay debt.

During Deployment

You will be very busy (an understatement) during deployment. However, you should take the time to monitor account activity and communicate with those back home to check joint bank accounts and verify that the budget remains on track.

You should also take full advantage of the Thrift Savings Plan (TSP), which is the Uniformed Service defined contribution plan. Similar to a 401(k) plan offered by many public and private companies, the TSP is a retirement savings plan that allows you to stash up to $19,500 for 2021, with a catch-up contribution of $6,500 if you are older than 50.

More specifically, consider:

• Increasing your monthly savings allotment,
• Contributing to a Roth TSP while deployed to a combat zone (contributions, growth and eventual withdrawals will all be tax-free) and
• Using the TSP Savings Deposit Program that guarantees a 10% interest rate on deposits of up to $10,000.

Use the momentum of a refined budget and bolstered savings to continue down the path of financial freedom by staying disciplined and developing good financial habits.

While deployments are often a requirement of military service, they also present an incredible opportunity for the long-term financial success of service members and their families. By focusing on both financial preparedness and the sustainment of healthy financial habits, returning service members and their families are sure to reap the rewards.

Read more from CFP® professionals who served our country at LetsMakeAPlan.org. You can also use the “Find a CFP® Professional” tool to find a financial planner with a focus on government employees and military servicemembers who can help you navigate the financial planning process and the varied benefits to which you may be entitled.