The men and women in our armed forces face challenges every day, even after returning from their respective tours of duty. And while nothing can truly compare to the challenges confronted by soldiers, sailors and airmen in the face of combat, integrating oneself back into civilian life — where tracking finances is key — can be tough in its own right.
Whether acquainting oneself with tax changes, rolling over retirement accounts, managing credit, building up an emergency fund or formulating a savings-oriented budget, there are already more than enough money worries for newly reintegrated veterans to contend with.
This Veterans Day, GOBankingRates sought to address these real financial concerns by reaching out to the most influential members and organizations of the military community. We asked these experts what they think the biggest financial hardship is that veterans and active service members face today, and what they can do to achieve financial peace.
1. Lack of Early Financial Education
Ryan Guina, Air Force veteran and member of IL Air National Guard, helps others in this precarious financial position through his site, The Military Wallet.
"The biggest financial problem I see military members and veterans facing is having relevant financial education," Guina said. "Financial literacy is a topic that many adults struggle with — and it's easy to see why. High schools and colleges focus on teaching coursework that leads to a degree; they don't always focus on teaching life skills. But the problem is often compounded for military members, who have a complex pay and benefits system (the complexity of the pay and benefits system led me to create The Military Wallet as a resource to help struggling military members and veterans)."
U.S. Marine Corps veteran, and author of the upcoming book, "8 Lessons in Military Leadership for Entrepreneurs," Robert Kiyosaki expressed that military members are primed to be entrepreneurs out of the service as long as they ready themselves with the "vocabulary of money."
"The advantage that service men and women have is that they have had outstanding training," Kiyosaki said. "They have shown discipline and strength and courage — and, in my opinion — those characteristics translate into success in the civilian world, especially as entrepreneurs. Since we aren't taught much (if anything!) about money in school, the easiest and fastest way to improve your financial health is to invest in yourself and your financial education. Rich dad's secret weapon was words… both the words you chooseand the financial vocabulary you build and use.
"Create a plan. Make it realistic. Commit to learning two new 'vocabulary of money' words each week. Understand what they mean. Use them is your daily conversations. Stick to your plan and put your discipline and mental toughness to work. It won't be long before you see that small changes can deliver big results. You'll feel smarter and more confident, more in control of your financial future — and better prepared to navigate even the most turbulent economic times."
2. Managing Money During Deployment
When thinking of money issues veterans face, most people think of the many financial obstacles that must be dealt with upon reintegration to society, but rarely about the difficulties that veterans face when managing their money during deployment overseas. Managing investments, paying bills and contributing to savings can be tough while in a combat zone.
"Financial difficulties are often made worse because service members are frequently forced to deal with their finances while they are deployed, sent overseas, or are out to sea," Guina said. "Most bases offer financial counseling services (often free of charge); but unfortunately, most people don't use the counseling until they dig themselves into a financial hole.
"A better solution would be to require military members to attend financial education classes that teach basic financial skills and cover the unique complexities of the military pay and benefits system. The military does have some courses, but they are woefully inadequate, and only briefly cover the most basic topics. A more in-depth course that stresses the fundamentals, such as budgeting and basic investing, would help prevent some of the struggles with debt and predatory lenders that many of our military members often fall into. This would help military members, and ultimately help the military's readiness capabilities."
Jeff Rose, Army National Guard veteran, certified financial planner and author of the best selling book, "Soldier of Finance: Take Charge of Your Money and Invest in Your Future," agrees that managing funds while deployed is a difficult balancing act. He recommends that military members reach out to a trusted person at home to be their financial eyes and ears.
"One of the greatest challenges that military have have is keeping track of their finances while on deployment or extended training missions," Rose said. "Keeping tabs on their credit (for identity theft) or if bills are being paid is very challenging. That's why it's important to have a 'financial battle buddy. For married soldiers, this is much easier as their spouse can handle this duty. For single soldiers, it's a little more challenging but that much more important. They should consider enlisting a family member or even a close friend that monitors their credit and makes sure that nothing comes up that looks off like an unusual credit card charge. Soldiers have enough on their plates defending our freedom. Having that financial battle buddy will allow them to focus on the mission and defending our freedom."
3. Not Enough Program Participation
JJ Montanaro, a certified financial planner at USAA, notes that financial programs can be a lifesaver for service members who are looking to be financially successful.
"Those that serve our country in uniform are confronted with the same financial challenges as the rest of America, however, the unique nature of military life can ratchet up the pressure," Montanaro said. "You don't get to tell Uncle Sam, 'No, I'd rather not make that move,' when you get orders in the military. A deployment or a move to a new location or 'PCS' as they're called in the military could be right around the corner — like it or not. This can cause a myriad of challenges with everything from housing to spouse employment.
"The military's version of a 401(k) — the Thrift Savings Plan — offers an easy and convenient way for service members to save for their future. Unfortunately, only about 40 percent participate. Sign up today."
Montanaro also recommends leveraging the military pay system. "One cool aspect of military life is that it comes with annual and time-in-service pay raises and promotions that offer a multitude of opportunities to use a portion of that extra income to do financial good (pay down debt, save, invest, etc.)."
4. Delaying Homeownership
Money Q&A founder Hank Coleman has served over 12 years as an active duty Army Major.
"Active duty service members struggle to make home ownership a winning proposition," Coleman said. "Many struggle to even break even when selling their home thanks to having to move every three years or less, [and] others find themselves backed into a corner of being an accidental landlord in the hopes of eventually selling their home for a decent amount.
"Members of the military should take a long-term approach to home ownership. They must come to the realization that it may be a better choice to rent, save, and then only buy a home after they leave the service. It's a hard choice to make. Home ownership is still a big part of the American Dream, but members of the military understand sacrifice, and home buying is typically no different. It often makes financial sense for members of the military to wait and buy a home later in life."
5. Inconsistent Spousal Income
Continuous relocation can make it tough to live a financially sound life. Differing costs of living and the decision to rent or buy are the biggest challenges faced when moving as a veteran or service member. But in addition to these aforementioned difficulties, constant relocation can wreak havoc on the ability of military spouses to find stable work and to pursue their own goals.
"Though the military does provide moving benefits, they do not cover all the costs of setting up a new household," Kate Horrell, military finance writer at Military.com's Paycheck Chronicles said. "Military families need to be sure that they have adequate savings to cover these costs, or these costs will end up as debt on a credit card or loan.
Horrell specifically points out the hardship that spouses face as a member of the armed forces lifestyle.
"Military spouses are underemployed at a much higher rate than their civilian counterparts," Horrell said. "The change from two incomes to one income is difficult if you've built a spending plan around two incomes. It is important that military families always strive to live on just the active duty paycheck, using any extra paychecks for debt repayment, accelerated savings, and extra spending such as vacations. Veterans recently separated from the military often face difficult finding a new job, usually at the same time that they are moving to a new home. Again, advance planning and savings can make the transition much less stressful."
6. Predatory Payday Loans
PenFed Foundation President and CEO Jane Whitfield targeted predatory lending as a huge setback for military members.
"Veterans face so many challenges when transitioning back to civilian life. The high cost of living, lack of employment, and medical needs can lead to a real financial crisis," Whitfield said. "We know of too many situations where service members took out payday loans with an extremely high interest rate just to cover the costs of their basic needs. These types of loans don't solve a military family's situation, they just make it worse.
"Predatory lenders are notorious for sapping a family's limited financial resources and even damaging their credit report. That's why we came up with a better option and it's not just a temporary fix. In many cases, recipients of these payday loans got into trouble in the first place because they need education on how to effectively manage their finances. Through our Asset Recovery Kit (ARK) program, we provide short-term loans at extremely affordable rates, along with financial education and credit counseling, to help service members build the skills they need to get out of the situation they are in and to build a strong future."
Edward Stepanyants contributed to this report.
This article was contributed by Jennifer Calonia of GOBankingRates.com, a leading portal for personal finance news and features, offering visitors the latest information on everything from strategies on saving money to getting out of debt.