5 tips to prepare financially to quit military service
Wes Jarvis * recently visited the Tiny Town branch in Clarksville, Tennessee. He was looking for help managing his finances. Having recently left the military, he feared that the change in income and benefits with his new civilian career would prevent him and his wife from living the lifestyle they enjoyed during his time in the military.
Like many of the more than 250,000 soldiers who leave the military each year, transition to civilian life is an exciting time filled with opportunity. If you’re going through a similar transition, there’s a good chance you’ve spent many hours thinking about what career to pursue, where to live, and filling out heaps of paperwork. It is also an opportune time to take key steps for financial success after service.
Make a budget
At least in the beginning, the money can be tight. It is likely that your living expenses will increase as you will be leaving behind your tax-free allowances, commissary and Tricare purchases. Take the time to formulate a family budget based on your new situation. Keep in mind that there may be new expenses that you may not have had to factor in before, such as the total cost of housing and health insurance.
Cut off any high interest debt
Sit down and take a closer look at your financial situation. Identify places where it can be difficult to keep up with current payments, and learn about the options available to simplify your monthly loan payments.
Wes discovered that one of his vehicles had considerable equity, which could be refinanced. Through refinance this auto loanhe could use the extra money to pay off one of his other car loans. He also saved $ 170 a month, ultimately putting more money back in his wallet.
Determine your next career
Wes knew that it was essential to begin his job search a year or more before leaving the service. Fortunately, a lot of free career resources are available for the military.
The Department of Veterans Affairs or a non-profit organization like Hire Heroes United States provides resources and employment assistance for Veterans. Military.com also offers access to a long list of veteran friendly employers and free master classes on employment in its Veterans Employment Project. Some career paths may require additional education, so take advantage of your GI Bill advantages.
Think about your mutual
Unless you retire from the military after at least 20 years or have medical retirement, you will no longer be covered by Tricare. Veterans have access to VA health benefits, but these benefits generally do not cover family members. If offered, joining your new employer’s health plan is usually the most profitable.
Finally, set up your savings plan
Many military families are focused on keeping track of their finances more closely. According to a Navy Federal Credit Union survey, 77% of military households have made at least one financial habit in the past year, such as cutting daily expenses and setting up an emergency savings fund. For active duty and veterans, 32% and 23%, respectively, said they were most proud to have increased their savings.
Define what you want to accomplish in civilian life – whether that’s saving to buy a home, pay for your education, or contribute to retirement – and set a timeframe to meet those savings goals. Contact your trusted financial institution to find out which options will work best for your future.
At Navy Federal Credit Union, we’re always here to help
Visit our Resources of military life for advice on financial readiness, deployment and relocation readiness, and to ease your transition to civilian life.
* Name has been changed to protect the identity of the Navy Federal Credit Union member.
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