FEBRUARY 9, 2023 – The topic of budgeting can be daunting, especially for military servicemembers and veterans. Discussing finances can evoke feelings of anxiety and uncertainty, leading to more questions than answers. While times can certainly be tough, maintaining a healthy relationship with money starts with implementing and sticking to a budget.
It’s important to recognize that budgets of military servicemembers differ from civilian budgets due to certain benefits and entitlements that civilians do not have, and the unique circumstances military families navigate – including frequent moves or maintaining two households while their military family member works away from the primary family home.
Creating Your Budget
Sometimes, the hardest part of budgeting is starting, as it can be time consuming and difficult to put pen to paper. Begin by creating a detailed list or spreadsheet to track income and expenses in real time. Steps include:
- Calculate sources of income. The goal here is to identify your normal and recurring sources of income such as salary/wages, spouse’s income, side jobs, social security or other government incomes. Any extra money that comes in (i.e.: selling items or receiving gifts) can be tracked but should not be included in regular sources of income.
- Evaluate monthly expenses. This should include essential expenses such as rent or mortgage payments, groceries, utilities and car or transportation expenses. It will also include estimates for repairs, subscriptions and memberships. Try to list your expenses as accurately as you can at first. Then, come back and refine these numbers if they change. A helpful rule of thumb is the 50/30/20 rule – 50% for needs, 30% for wants and 20% for savings.
- Analyze funds for excess spending. After finalizing the essentials, it’s time to evaluate what you spend your money on monthly. This is an opportunity to really decide what is most important to you and identify spending you can cut back on to accommodate for priority expenses. For instance, if your gym membership is a large recurring expense that’s important to you, reducing the number of times you eat out or pay for coffee could give you a cushion to cover membership fees. Sometimes you may reduce or cut an expense for a period of time while you refine your spending. Evaluating where you can trim expenses can be refreshing. While sometimes it can feel like you are sacrificing a lot to make ends meet, remember the reason for making a budget is to find ways to save more and plan for your future.
- Allocate funds for savings. Putting money aside each month is key for a successful financial future – whether it’s in case of emergencies, last minute moves or fun items to look forward to. If you don’t have any savings, start small and find room in your budget to put away a target amount from each paycheck. Getting into this habit will only create peace of mind and ease down the road. Those with a savings plan are twice as likely to save successfully.
- Tap into resources. There are many resources available that can help guide veterans and servicemembers. To stay on track, budgeting apps can be extremely useful and streamline personal finances. Banks or credit unions can guide veterans and servicemembers by answering any questions on financial readiness. Programs including the Servicemembers Civil Relief Act (SCRA) can help reduce interest rates, protect from potential foreclosure and eviction, and more. Each military branch also has specific relief organizations that provide grants and loans.
Proper Preparation is the Key to Financial Success
After implementing a plan of action for budgeting, it will only get easier to adjust and track funds accordingly. Seeing funds and bills in one place can shed light into where you’re spending more, and areas that can be cut back. To make budgeting a habit, it takes discipline and hard work – something military members know well. Stick with it and stay patient, as budgeting is a key component of pursuing a successful financial future for you and your family.
COL Jerry Quinn (USAR), Chief Operating Officer and Secretary at AAFMAA
Jerry Quinn is a Colonel, U.S. Army Reserve & Chief Operating Officer of the American Armed Forces Mutual Aid Association (AAFMAA), our nation’s longest-standing military financial services and not-for-profit organization.