How to Financially Plan For Veterans
If you were or are in the military, make sure you understand all the financial benefits that are offered to you.
Historically, veterans and military members are not equipped with the financial tools they need to succeed in civilian life In many cases, veterans leave the military with a lot of debt and bad credit scores, making it difficult to find another job or achieve financial stability. Leaving the military is a big financial transition, and veterans should be given the financial support they need to have financial freedom. Here are some financial planning strategies for veterans.
Take Steps to Become Financially Educated
The majority of veterans do not have the financial education they need to adequately manage their finances. After leaving the military, it is important to take key steps to understand money saving and planning strategies. Meeting with a financial advisor is the best way to understand what your monthly living expenses will be and how to use veteran resources, such as the GI Bill. Financial advisors can provide essential strategies for increasing your credit card score and managing your debt. Additionally, they can advise the best credit card, such as an American Express credit card, for your needs.
Use Your Education Benefits
One of the best ways to become financially stable after leaving the military is to invest in your education. Taking courses or getting a degree is a great way to develop the skills you need to land your next job. Through the GI bill, Veterans are eligible for three years of tuition free school at a state college. With a degree, you are more likely to be hired by potential employers.
Understand Tools for Debt Relief
Military service members typically have excessive spending habits, which causes them to accrue a lot of credit card debt. Because of this, the government has created some essential tools military members can use for debt relief. For example, the Service Member’s Civil Relief Act, caps interest rates for any loan taken out by a military member prior to their service. If you have debt, It is important to take advantage of these debt relief tools to set yourself up for financial freedom.
Create a Budget and Follow It
The best way to become financially stable is to create a budget. A budget will consider your personal income and needs while allocating money for saving or unexpected expenses. Following a budget is the best way to ensure that your lifestyle reflects your monthly earnings and that you have some money put aside for emergencies or larger purchases. The military offers free financial counselors that can help you create a budget tailored to your financial situation.
Track Your Spending and Identify Ways to Save
It is very easy to spend a lot of money without realizing it—“small purchases” can really add up over a long period of time. The best way to identify areas where you could save money is to track your spending. Keeping your receipts or logging all your purchases over a month can highlight how certain purchases affect your account balance in the long-term. For example, you might realize that your seemingly inexpensive coffee habit is costing you more than you think.
Use Your Benefits When Buying a Home
After leaving the service, many veterans will go on to buy their own home. There are some great benefits you can take advantage of to lower the price of your first home. The Veteran's Administration (VA) home-loan program is one of the best benefits veterans can use to buy their first home. For a home-loan, the VA guarantees up to 25 percent of the loan payment. This allows veterans to get a home without a down payment or mortgage insurance.
Establish Residency in a State With Low Taxes
Different states have different income tax policies. A great way to save as a veteran, is to establish residency in a state such as, Florida, with no income tax.
Make Plans for Your Retirement
Many service members participate in the Thrift Savings Plan (TSP) which is a retirement plan for federal employees. When military workers leave the service, they are often unaware of their retirement options. For most veterans, it can be advantageous to transfer their retirement plan from their (TSP) to an IRA or 401(k). The benefits of the TSP do not compare to the benefits of more contemporary retirement plans. For example most contemporary plans offer great features such as income riders.
Entering civilian life is a huge transition for service members. It is important that veterans understand the best ways to utilize their financial benefits and implement saving strategies to ensure their financial security.