Paycheck Chronicles

The ABCs of Dual Income in the Military

Investment Partnership

Two -- you fill in the blank -- are usually better than one. If I'm having a financial discussion with a military couple, often the blank could be filled in with "incomes."

The challenge military spouses face with unemployment or underemployment are well documented, but today I thought I'd take a glass-half-full look at it.

In other words, what if you're a military spouse and you just landed a sweet gig? What's next? Of course, you'll add value to any organization that has the foresight to add you to its team, but what do you do now that you've got a little (or a lot!) more income than the military paycheck from Uncle Sam?

Here are a few things to consider:

A. Assess and take advantage of all the benefits of employment. Sure, more money coming in every pay period is a beautiful thing, but your new employer may offer a host of benefits above and beyond that income boost. Matching contributions -- you know, free money -- to an employer retirement plan like a 401(k), the ability to set aside money for child and health expenditures using a flexible savings account, and education benefits all come immediately to mind. Don't let your comfort with military benefits like Tricare lull you to sleep as you survey all the potential benefits of your new employer.

B. Build core expenses based on one income. I know it's obvious, but one of the biggest challenges for military spouses and employment is ... uncertainty. When will those next orders come rolling in? In many cases, a PCS may mean the end of your work stint. If that's the case, or you're not sure, don't let your newfound income become the funding source for your core recurring expenses. Instead, budget those expenses based on the military member's income. For example, a new job shouldn't necessarily mean a five-year loan for a luxury sedan. You get where I'm coming from, right?

C. Create options during transition. The one commonality about military service is that it ends. And while I always recommend that you create a robust "transition fund," say 12 months of expenses, I recognize that's often not likely or possible. But if you find yourself in dual-income mode, you might be able to make some headway. Furthermore, being able to make the leap to civilian life with one strong and reliable income could ease the stress of transition considerably.

OK, if I'm going to really be glass half full, I can't stop at the "C," I've got to take it one step farther down the path to financial security:

D. Do some financial good. Whether it's building an emergency or transition fund, paying down debt, saving for retirement or setting aside money for other top-of-mind goals, a new job creates an opportunity. Don't miss the chance to save, invest or pay down debt with money you are not already spending.

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