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Financial Planning

Advice Military Leaders Can Give Their Servicemembers Who Are in Debt


Entering the military to serve your country wasn’t just a career choice you made, it was a decision that has affected every aspect of your life, your family, and your outlook — at every age and career level along the way. Now, as an experienced military leader, you’re in a unique position to inform and inspire those who look to you for your guidance. Just as you’ve learned how to navigate the highs and lows of military life, the careers of the servicemembers under your leadership will need to do the same. If you’ve made your share of financial mistakes along the way, you’ve got a special opportunity to pass along financial best practices to them, so they can acquire the skills and information they need to avoid financial pitfalls, save successfully, and develop payment habits now that will serve them long into the future.

One struggle younger servicemembers may face, however, is that their attention is often focused on getting necessary training, meeting the demands of the military lifestyle, and fulfilling the challenges that come with a career focused on protecting others. Keeping their personal finances intact and strong may not be top-of-mind. But they should be. Especially if they’re struggling to stay out of (or get out of) debt. That’s where you can step in with a few tried and true insights.

For instance, AAFMAA President, Mike Meese, Ph.D. (BG, USA, Ret.) notes, “The best rule for saving that I used was ‘save half and spend half.’ Before you got a raise, you were used to living at your lower pay rate. So, when you get a raise due to longevity or promotion, increase your spending by half of the raise, but put the other half into savings. At the end of a military career, you can have many thousands of dollars saved — while still substantially improving your standard of living.”

That’s a great point to share with those who look up to you, especially if they’re just starting out and have a long military career ahead of them. The sooner they start saving, the better off their future can be.

Meese also notes that, “All new and many current servicemembers are covered by the Blended Retirement System (BRS). They should all be saving 5% of their pay into their TSP. The military matches that money, so if they are not saving 5% they are literally leaving a 50 to 100% return on their money on the table — it is the best sure thing anywhere to save for the future.”

Likewise, AAFMAA Chief Operating Officer and Secretary, Jerry Quinn (COL, USAR), says that using the “waterfall” debt payoff plan, where you pay off the highest-to-lowest interest debt first is a smart way to start reining in your finances. The next strategies to focus on are savings, which involves creating, “...emergency funds to rainy day/fun day savings, and then investing to develop retirement savings and build a legacy.”

Quinn additionally notes that taking advantage of, “mobile banking, credit/debit card categories, etc., including some of the digital budgeting tools,” is also smart. Or, if your servicemembers work better with defined numbers, they could try the 20-50-30 rule, where you set aside 20% savings (e.g., pay yourself first/ save automatically), applying 50% to your personal needs (e.g., housing, transportation, etc.), and then spending just 30% on your wants (e.g., eating out, special purchase, etc.).

You can learn more about supporting younger servicemembers’ financial journeys in AAFMAA’s financial readiness video series, featuring Quinn in conversation with the Department of Defense Office of Financial Readiness.

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Use of DoD imagery does not constitute or imply DoD endorsement. Photo by Air Force Airman 1st Class Edgar Grimaldo. Chief Master Sgt. of the Air Force of the Armed Forces of Ukraine Kostiantyn Stanislavchuk delivers a speech to non-commissioned officer Academy graduates at Ramstein Air Base, Germany, March 23, 2023.