Military Family Finances and Lifestyle Survey

Businessman drops coin in pink piggy bank.

USAA and Blue Star Families have recently posted the results of a four year survey covering the financial realities military families face. We had the opportunity to discuss the findings with JJ Montanaro of USAA and Marissa Ivo of Fleishman Hillard.

Tell us about USAA and Blue Star Families.

Blue Star Families has been advocating for military families for several years, and USAA’s mission is to achieve financial security for military families. It was a natural connection when Blue Star Families was looking to dive a little bit deeper into what military families face on the financial front. We partnered with them and helped develop some of the questions that were used in the survey.

What’s your opinion on the results of the survey?

To me, the most alarming part was the fact that 65% of military families were experiencing financial stress. There are actually some pretty positive findings in the survey, but the reality of folks being stressed about their money really stood out.

What do you think is the number one thing military families should be doing to deal with their financial stress?

When you look at military families everywhere, there are so many things going on and the pace of life is fast. My hope would be that people, because everyone’s situation is different, just take the time to sit down and look at their own situation to determine their financial goals. They need to ask themselves if they’re on the right path or if they even have a strategy to get there. In a nutshell, to do some basic financial assessment and planning so they’ve got some goals and plans. It only takes a little bit of time out of their lives to take a serious look at where they stand on the financial front.

How are military families doing with budgeting?

On the positive side, I was shocked when it was reported that 87% of folks were using a budget because that doesn’t really dovetail with my own experience. But I think where the rubber meets the road is in how they were following the budget because 63% were only following it loosely. I think the difference between success and failure, when it comes to managing your cash flow on a monthly basis, could be that difference between loosely and tightly following your budget.

Would you say budgeting is the number one thing military families aren’t doing well?

If you look at the debt numbers, the debt is, generally speaking, a product of not following what I would call the financial golden rule of spending less than you earn. That all starts with a budget that you adhere to and guides your spending and allows you to do just that. Certainly that’s an area that we could all work on.

What did you find out about how military families save?

Probably the biggest finding we had was that very few military spouses actually had retirement plants, IRAs, or employer plans in their own name. Certainly, retirement savings is a team game, but there are a lot of opportunities whether it’s a spousal IRA or taking advantage of something that your employer offers for military spouses to get in the retirement savings game. Certainly that was something highlighted we’d like to see more of.

Some of the other things on that front were in line with DOD statistics or Thrift Savings Plan statistics. The participation rate in the military’s version of a 401k is somewhere around 40%. That was what was reported in the survey, and that’s an easy, convenient, inexpensive way for folks to really jumpstart their retirement savings.

Is it difficult for servicemembers and their families to be informed about Thrift Savings Plan?

I think that to some degree, folks in the military feel a sense of comfort in that they have military retirement, which of course is a great benefit. They don’t necessarily feel compelled to look for outside opportunities to save for retirement. I think they just need to be encouraged. Especially in this environment with so many things subject to change on the benefit front; there’s a lot of talk about military retirement being changed. It really puts the burden on the individual to take charge of their own situation. The only way to do that is to step up, start saving, and use a plan like the TSP.

Is there anything the military could be doing differently to educate families about the Thrift Savings Plan?

There are a lot of companies out there now that actually have mandatory default enrollment in employer plans. I’m not one to speak in terms of legal implications, but certainly from the standpoint of getting people started, that wouldn’t be a bad thing.

Does the chaotic nature of military family live make saving more critical than for the average civilian?

While deployment offers financial opportunities, it also makes it easy to shift finances down on your priority list. The PCSs, again another opportunity, is filled with potential pitfalls in terms of housing and selling a house and finding employment. I think there are challenges in the military life style that do make it more important to take some time with your personal finances and makes it more challenging than what others might face.

I noticed that 90% of military families wanted more advice on financial planning. What kind of work is USAA and Blue Star Families doing along those lines?

We hope by highlighting the survey and the results that it gets people thinking about their finances. The reality is that there are resources out there like USAA and what’s available on instillations everywhere that can be taken advantage by servicemembers. They do have to know that they’re there and feel comfortable in seeking that assistance. If you look at the military state of mind, one characteristic that’s valued is independence. Asking for help sometimes is a challenge, but it could be something that’s well worth the effort.

What is Blue Star Families doing to make this information more public?

Blue Star Families has conducted the survey for three or four year. They advocate for military families, and this is the first year where the financial component has been bulked up and really higihlighted as part of the process. We’ve done some videos with the folks at Blue Star Videos to highlight some of these findings.

Does the current military drawdown and the predicted influx of veterans make financial planning even more critical?

I think certainly one benefit, from a financial standpoint, of the military lifestyle is that you do have a paycheck and a situation you can count on, plan around, and build on. So when you throw in the uncertainty of continued service, it definitely puts a premium on covering the areas we’ve talked about. If you don’t know what lies around the corner, it makes it all the more important to have a robust cash cushion in place.

If you had one piece of financial advice to give to servicemembers and their families, what would it be?

My one piece of financial advice would be to build a situation where you spend less than you earn, and within that spending you have some robust savings for today and for the future.

For more information, check out these videos created by Blue Star Families as a result of their survey:

Life Insurance
Debt and Budgeting

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