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New military spouses have SO many questions! So do new military members! There’s so much to know about money in general, and money and the military can be particularly tricky. I definitely did not know enough about money when I was newly married. I wish I had learned a lot of things earlier. Here are some things I wish that I knew.
Learn, Learn, and Learn About Money
Military pay and benefits can seem complicated, but there are a world of resources to help you understand them. Installation family readiness centers offer classes on all sorts of topics. There are also organized spouse training programs like the Navy’s Compass program or Army Family Team Building.
In addition to base resources, the internet can help you learn just about anything you want to know. There are blogs like this, Facebook groups, and online forums for talking to other military family members.
Here are some key skills to know:
How to read a Leave and Earnings Statement (LES). It’s the military equivalent of a pay stub, and it explains all the pays, allowances, and deductions.
How pay raises work
How bonuses get taxed
Fund Your Retirement
Military spouses need their own retirement savings. Unfortunately, military spouses face career challenges, and that can make it hard to save for retirement. If you are working, be sure to contribute to any available tax-advantaged retirement plans like a 401(k). Whether you are working or not, contribute to an Individual Retirement Arrangement. If you’ve maxed out those options, consider starting a small business just to open a SEP or Simple IRA or Solo 401(k). It can be hard when you’re on a limited income, but strive to save at least a little bit each month.
Military spouses need their own retirement savings. Click To Tweet
SGLI and FSGLI
Be sure your spouse and you are both enrolled in the Servicemember’s Group Life Insurance (SGLI) and Family SGLI (FSGLI) programs. This life insurance is incredibly cheap. Not sure if your spouse is enrolled? Check their Leave and Earnings Statement (LES) to see if premiums are being deducted. You should also ask your spouse to check their details on the SGLI Online Enrollment System to verify that the right beneficiaries are listed.
(I’m sure there are situations where someone wouldn’t want to be enrolled in SGLI or FSGLI. But I have a hard time imagining them, given the cost.)
Keep Your Own Credit
I have nothing against spouses comingling all their money, but there is a lot of value in maintaining your own credit cards. First, it’s helpful in an emergency. If one partner loses their wallet or has their identity stolen, all your sources of credit won’t be frozen. Which is doubly helpful if you need a credit card to order a replacement driver’s license because it was in the same wallet with the credit cards that were stolen.
Second, the statistics say that someday you’ll be single, whether through divorce or death. Navigating that new life plan is hard enough without being credit-less. You want to have your own credit.
Thrift Savings Plan
Encourage your spouse to start contributing to the Thrift Savings Plan (TSP) right now, and increase their contributions with each pay raise and promotion. The sooner he or she starts, the more they’ll be able to accumulate in that retirement account. And if they are in the Blended Retirement System, they’ll get matching funds from the government added to their account.
PCS Travel Allowances
There are many allowances to help cover the costs of military Permanent Change of Station moves. Make sure you take advantage of all of them!
For example, I did not know about Temporary Lodging Expense coverage until our fifth or so move. Why did I sleep on the floor of my empty house when I could have been staying in a hotel?
Taxes and Domicile
Military families have some special tax considerations, including the ability to maintain a state of legal residence (domicile) somewhere besides where you’re stationed. New spouses should understand how the Military Spouses Residency Relief Act (MSRRA) modifies the Servicemembers Civil Relief Act, and when it means they can retain an old state of legal residence, and when they can’t.
Mystery Money
At some point in your spouse’s military career, they will have a paycheck that is too large. Possibly even huge. You should assume that this is a mistake. Whatever you do, don’t spend it. Not even a teeny tiny bit. Move this money to a separate savings account until the military decides that it wants the money back.
Certainly, check the LES and try to figure out what has happened. Getting to the finance people quickly may prevent an overpayment on the next check. But just leave the money aside from your regular money. When the military decides that they want to be repaid, they could take entire paychecks to do so. You’ll be glad you didn’t buy a new sofa, or go to Vegas.
Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act (SCRA) gives military service members and their spouses a variety of legal protections. This includes terminating a lease early due to deployment or Permanent Change of Station (PCS) move. It also includes maintaining your state of legal residence when you move around, which can be a big tax savings or have other benefits.
Not technically SCRA, but many credit card companies waive annual fees for active duty military and their spouses. You can get some great credit card benefits by taking advantage of this!
Transition Fund
I strongly encourage your spouse and you to consider building a transition fund for when they eventually leave the military. Whether they do four years and don’t re-enlist, or stay for a 30-year career, no one stays in the military forever. The transition is typically more expensive than people expect. I hear from way too many people who are panicking because they are leaving the military in two months, have no savings, and have no plan.
Do some quick imaging about what you would need to support your family for six months, and start socking away a little money each paycheck. Your needs will change over time – adding a baby means that fund needs to grow more, but reaching eligibility for military retirement may mean it can shrink.
There are many other important things that military spouses need to learn, but these are the top ones I try to include. Is there something you would put on my list? What do you wish you had known?
