Will Military Service Help Me Save Money?

Chelsy Meyer
Reading Time: 4 minutes

Saving money can be difficult for anyone, but it can be a completely different ballgame when you’re in the military. Being on tour, having a family at home, living on base, or being a veteran all present different challenges and opportunities in terms of saving money. You still need to budget, try not to make the same financial mistakes many young people do, and understand the science of saving. The military may help you save money, but only if you handle your finances appropriately, just like any other career — the details just may be a little different.

The Importance of Budgeting

The first aspect in saving money is understanding how to budget in order to have money left over every month to put into a savings account. There are a few key elements in understanding the big picture of your finances and creating a personal budget:

  • Track your income: What you make as an active military member may be more than some civilian jobs, but the hours may change that number a bit. Your pay also depends on rank and job assignment. Your bonuses and allowances depend on marital status, location, etc. Take all of your net income into consideration per month when creating an accurate budget.
  • Know how much you owe: Gather all of your debt and make a plan to pay on it each month. Every credit card, student loan, hospital bill, and personal loan you have needs to have a plan of payment attached to it. Your military status may help your credit in certain ways — such as the potential for loan forgiveness programs — but you also need to begin paying off outstanding debt as well.
  • Track your expenses: Your expenses may be different than the average civilian. In some cases, the military will offer housing, pay for clothing, or eliminate the need for some utilities. Each situation is different, so gather all of your expenses and bills and find out how much money those require each month.
  • Make positive long-term financial decisions: When you’ve budgeted how much you make, what you owe, and how much your everyday expenses amount to each month, you will have a better idea of how much more you can afford. When you’re considering new purchases, consider first how much money you can be saving, perhaps purchasing a home with the possibility of lower mortgage rates for being a military member, or putting money aside for extra retirement savings. Long-term financial purchases should be prioritized over short-term fun purchases.
  • Make changes accordingly: If you’re seeing any discrepancies in your budget such as owing more than you’re making, make some changes. Spend less, talk about consolidation options with a banker, and tighten up your budget.
  • Keep checking in: Your budget is an evolving plan. With each raise, bonus, new loan, and added expense, your budget looks a little different. Be sure to continue checking in so that your budget always remains current.


Common Financial Mistakes of New Recruits

The military may help members save money because you’re paid a salary, there are options for bonuses, in some cases your housing/food/utility expenses are paid for, and you’re offered health care. Your family’s financial situation is also taken into account as well, as many allowances are given based on family size. You may be eligible for paid schooling, you may qualify for military loans even with bad credit, and you’re often given large bonuses. Since a military career requires so much sacrifice, it tends to come with some perks. Sometimes, those perks have a way of eliminating financial issues some have. A lot of debt comes from medical bills or financial aid, and the military can sometimes take those out of the equation, leaving both active and veteran military with more money. More money doesn’t always mean more ability to save. In order to benefit from the aspects of the military that may allow you to save more money, you have to be good with your money. Unfortunately, some new recruits don’t have a healthy money mindset, and make mistakes as a result of receiving big checks or bonuses. Enlisting and buying a big, new truck seems to be a common practice, but it’s not a smart decision if your other financial ducks aren’t in a row. Here are some common mistakes to avoid:

  • Making a large purchase without budgeting first – Paying off debts may not be as thrilling as buying a new TV, but it may be smarter for your finances. Don’t blow your bonus, and take a look at your finances before big purchases are made.
  • Ignoring credit – A military career may seem stable enough to ignore credit issues, but credit issues may keep you from obtaining certain security clearances that are required for higher ranking positions.
  • Not making a savings plan – This goes for both retirement and a personal savings account, because you should have both. They won’t happen on their own, it’s something you have to make a conscious effort into doing.

Knowing How to Save

It’s the old 50/30/20 rule: Allocate 50 percent of your income to needs, 30 percent to wants, and 20 percent to debt and savings. This is just a baseline, of course, but it’s a starting point when considering what to do with your plan to save money. The science behind savings involves setting realistic expectations, and having a savings mindset. Money should go into a savings account each month in the same way that your bills get paid every month. Saving money isn’t something you do if you have extra money, it’s something you do no matter what. The military will only help you save money if you prioritize savings and take advantage of the financial perks available. Like many other aspects of the military, there are financial perks to your status that can help you save. The Thrift Savings Plan (TSP), for instance, is a government sponsored retirement savings investment plan. The retirement income that you receive from your TSP account will depend on how much you have contributed to your account during your working years and the earnings on those contributions. The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under so-called “401(k)” plans. Whether or not military service will help you save money will heavily rely on your ability to take advantage of the financial perks given to service members in return for faithful service and sacrifice for their country. If you create a budget, avoid common financial mistakes, and understand how to save, the military can absolutely help you save money. Since you’re given extra bonuses, everyday living allowances, and health benefits, you may find it easier to save than the average civilian, but you’ll still need to prioritize savings in order to benefit from the financial security that a military career can offer.

For more tips and guides, visit our military support resource center.

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