Before you leave for your next military deployment, take these steps to make sure the finances on the home front are well taken care of. Money management is an essential skill for all families, but it becomes even more important when one of the heads of the household is preparing to leave for a long period of time. Use these tips to set up a good financial foundation for your family, so you can focus on your mission while you are away.
1. Work out a budget with your partner
Military salaries are competitive, but they still require careful budgeting. Before you leave for duty, have a talk with your spouse about how much money will be coming in while you’re away, as well as where you need to allocate those funds. Plan for everything that might occur during your absence: Is your car going to need some repairs? Are the kids going to need summer camp tuition money?
Figuring out your budget before you leave will help reduce stress on both you and your spouse while you are away. It will also help deter unwelcome financial “surprises” upon returning home.
2. Save for emergencies
Plan on there being at least one financial emergency — a leaky roof, a broken dishwasher — while you are away. Save a portion of your pay every month for an emergency fund. If your spouse also works, make sure part of that salary goes into the emergency fund as well. At minimum, your emergency fund should include between $1,000 and $5,000. A full-fledged emergency fund contains enough money for your family to pay all of its expenses for three to six months.
3. Prepare for retirement
The military is one of the few careers that still offers a guaranteed pension upon discharge. However, that does not mean that your pension is enough to cover the expenses of your retirement. Time Magazine has a great article about how to determine how much money you and your spouse are going to need for retirement — and that number is often much larger than you think. For many Americans, in order to maintain a middle-class standard of living for the 20+ years after retirement, you need more than one million dollars in retirement, pensions, and Social Security combined.
Help bridge that funding gap. An open IRA account will save you money and qualify you for tax benefits. The more money you have saved now, the more comfortable your retirement will be.
4. Check finances online
Even though your partner will be doing the bulk of the family spending while you are on duty, you can still track your finances while you are deployed. Online banking and online budgeting sites such as Mint help you see current account balances as well as where your money is being spent.
It is not the best use of your time during deployment to spend every free minute checking accounts like a hawk. However, a monthly check-in is often enough to give you peace of mind. Combine your check-in with a Skype call home to ensure you and your spouse stay on the same financial page during your tour.
5. Practice good financial habits
This is where standard financial advice comes into play: know the difference between needs and wants, avoid credit card debt, enjoy your small luxuries but be careful not to overspend. These basic financial tips may sound like cliches, but they are essential to your family’s financial health. At the heart of every cliche is a kernel of truth.
Use these five guidelines to keep your financial health in top shape during your next tour of duty. Remember that the government also offers Financial Readiness resources to give you all the information and skills you need to manage your finances. Support your country and your family by maintaining good financial habits while completing your missions.