Military enlistment comes with unique financial challenges. Here’s how your family can prepare before boot camp starts.
Joining the military was always a possibility for my son. His dad served admirably in the Air Force, deploying multiple times before and after 9/11. He didn’t look forward to spending more time in a classroom. A military career was a natural choice.
While we were excited for his Army training to begin, we also knew that he’d need to be financially prepared. Unless you’ve lived this life, you have no idea what to expect. You likely focus on their overall safety, their training, possible deployment locations, and the emotions that everyone experiences. You might not consider, or even be aware of, the financial aspects and decision-making required. Thankfully, we had the benefit of my husband’s past military service and my financial knowledge to guide us.
For starters, we knew that new recruits have very limited access to their phones and laptops. In fact, they’re required to lock their phones away for most of the week. At the beginning of bootcamp, our son only had access to his phone for a few minutes on Sundays. As his training progressed, he got more phone privileges, but his focus was on connecting with family, not managing his finances competently.
This communication blackout meant that we would temporarily oversee his finances. But many families have no clue about what’s to come, and the military doesn’t provide much guidance beforehand. Whether supporting a child entering the service or a spouse deploying overseas, here’s how to prepare.
Leave yourself plenty of time
The most important point to know about military service is that your loved one’s top priority will be their service. Taking care of bills and monitoring their bank accounts? Not so much.
The first thing we did was obtain powers of attorney for finances and health care so we could act on our son’s behalf. This is a good idea even if your child doesn’t go into the military. Once they turn 18, you will no longer be able to make financial or health care decisions for them, and there might be emergency situations when you will need to.
We then combed through his recurring bills to see which services he wouldn’t be using during his absence. I recommend taking this step 60 days before departure and then again 30 days before to catch any irregular charges you might have missed the first time around. We canceled his Xbox, Spotify, and gym memberships, for example, but kept his auto insurance active so he can use his car once he’s done with bootcamp.
For married couples, having joint accounts will allow you to continue paying bills without interruption. However, many new service members are newly married and may not have had time to establish joint accounts. In this case, powers of attorney and online access give loved ones the ability to pay bills.
On that note, make sure you have all necessary online logins and passwords. One critical step we took was updating two-factor authentication settings, as these typically send verification codes to a mobile device. Since our son’s phone would be gathering dust in a footlocker thousands of miles away, we changed the authentication to go to email instead. Without this step, we would have been frozen out of his accounts despite having the passwords. In the event you need access to their accounts, you don’t want the added stress of being locked out.
Understand military benefits
Joining the military brings many generous benefits, but they’re not always easy to understand. Review these benefits with your loved one so they know what they’re entitled to before they arrive on base.
The first is the GI Bill, which was a major reason why our son chose the military over entering the workforce. The military will pay for in-state tuition and fees at public colleges, and up to $28,937 per year at private institutions, generally after three years of service. The catch is that they must opt in at the start of your service, so make sure they’re aware of this crucial step.
There’s also the government’s retirement plan, called the Thrift Savings Plan. The Army auto-enrolls service members at 5% of their salary (and matches up to 5% of contributions). But if your child or spouse has no other living expenses, consider urging them to contribute more. Our son, for example, is contributing much more at this point. When his expenses grow, he plans to adjust his contribution to a smaller amount.
Active duty service members also have access to the government’s health insurance plan called TRICARE. While signing up as a service member is easy enough, spouses and dependents will need to take additional steps to enroll.
Watch the pay schedule
One surprise for many families is how military pay works. The first paycheck typically doesn’t arrive until about a month after starting service. This means your loved one needs to have enough money saved to cover their expenses during that first month. I’ve seen military spouses in online family support groups worry about making rent during this gap period.
When new recruits arrive at boot camp, they typically receive a small advance in the form of a debit card that they can use at the on-base store to purchase essentials like toiletries. This advance is then deducted from the first paycheck.
Plan for tax season
Military service doesn’t exempt anyone from filing taxes, and training schedules don’t necessarily line up with tax deadlines. I had to file my son’s taxes for him. Without preparation, many families scramble during tax season, potentially incurring penalties and fees.
If your family member will be unavailable during tax season, figure out how you’ll get hold of the necessary documents, such as W-2s or 1099s, or be prepared to file an extension. Remember that extensions only change the filing deadline from April 15 to October 15. Your service member will still be responsible for paying whatever taxes they owe in April.
Build a foundation for life after bootcamp
As my son prepares to graduate from his training program and start his career in the Army, he has a solid financial foundation under him. Soon he’ll have a housing allowance, have his car back, and be preparing his own meals. At that point, my goal will be supporting his independence rather than managing every aspect of his finances.
That said, in cases of service members who are single, I recommend keeping powers of attorney in place even after training ends. Military life is unpredictable, and deployments or transfers can happen at a moment’s notice. Following 9/11, my husband received orders and deployed within 48 hours, leaving behind his house, car, and college enrollment with no time to prepare.
Stay prepared for the long haul
The transition to military life is a big adjustment, not just for recruits but for the entire family. By preparing financially beforehand, you can create a foundation that supports your loved one’s service instead of adding unnecessary stress.
The pride you’ll feel watching your loved one grow into a life of service will be that much sweeter knowing that they can fully focus on their most important mission, free from financial worry.
MORE ON HERMONEY:
More money news when you need it! Get the latest and greatest updates on all things investing, budgeting, and making money. Subscribe to the HerMoney newsletter here.