Financial stability is important for any family, but especially for a military one. Military families face different challenges when planning for the future, especially when service members are deployed. For this reason, members of the military need to put their finances in order. The following tips can help ensure your financial security.
Financial Planning Tips For Military Families
Pad Your Emergency Fund
The importance of an emergency fund cannot be stressed enough. While this is one of the most-touted pieces of personal finance advice, there are still people who think they either do not need an emergency fund or do not know how to get one started. Financial experts recommend having three to six months of income saved in the event of an emergency. For service members who face deployment, additional savings are required. Do not wait until you receive your orders to start your emergency plan. Find ways to cut costs or increase your income now to avoid falling short in the future.
Designate A Power Of Attorney
A spouse, trusted friend or relative should be designated to handle your financial transactions while you are away. It is important that the person left “in charge” has the legal authority to act on your behalf in the event decisions or actions are required to rectify a situation. Your base legal office can help you set up a power of attorney at no cost to you.
Gather Your Information
To ensure everyone is on the same page, take time to list all of your financial obligations, account numbers, contact information and any other information that may be needed in your absence. You should also provide notice in writing to all your creditors and other financial institutions that you are being deployed; a copy of this notice should be given to your power of attorney as well.
Be sure to notify any lenders that you are being deployed. This may qualify you for certain protections under the Servicemembers Civil Relief Act, which gives you legal protections and may reduce interest rates you pay on loans.
Review And Update Insurance Policies
Insurance policies are just that: insurance in the event something happens. To get the most from your policies, make sure you have investigated any special benefits that apply to military members while deployed. You should also confirm the beneficiaries are up-to-date and correct. Service members can save money on auto insurance if no one will be using their vehicle while they are away.
Ask For Help When You Need It
Seek guidance or support from other members of the military who are facing similar challenges. Some organizations can help you prepare for your deployment and guide you in getting your finances in order. You can also reach out to various services on your base that offer emergency financial resources.
Know Your Options
Even if you take all the proper steps to ensure your family and finances are taken care of in your absence, understand that no one can predict the future. Illness or other unforeseen circumstances may arise and you should know where you can turn in the event you cannot pay your bills. There are certain protections extended to members of the military and knowing what options are available can make a difficult situation more manageable.
When you factor in the possibility of tax-free income and other allowances, deployment can be a boost to your family finances. Have a plan in place for this extra income to ensure it is not absorbed into your regular budget. You can add it to your emergency fund, pay off consumer debt or invest it in your future.
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Marty says
Hi there,
I just wanted to comment on this post and some of the key points you touched on that are crucial to financial success!
As an insurance representative, we often recommend that our policyholders integrate insurance considerations into their overall budget plan and emergency fund planning, especially now more than ever as the economy continues to fluctuate.
Another thing I wanted to suggest is using a financial calculator when assessing your own finances as a great way to chart out where your money goes each month and how that will impact your situation.
There are a lot of different calculators out there but one I’ve found helpful and comprehensive is available from Kiplinger: http://www.kiplinger.com/tools/budget.
As people think about how to establish their emergency fund, we urge our customers to incorporate the cost of potential insurance deductibles – auto, home, health, and others – in the event of a claim – as you never know when an emergency will arise.
Does anyone else have any other helpful tools people can use when trying to chart their finances as a means to reaching a specific financial goal?