Financial Advice for New Military Spouses

Updated: December 19, 2020
In this Article

    New military spouses are keenly aware that being married to a service member means frequent moves and family separations. But not everyone realizes the personal financial pitfalls that can come with following your loved one’s career. Saving for retirement, having a source of dependable income, and taking charge of the household finances are all too easily left on the backburner. Here are some ways to plan for your financial future in the wake of wedded bliss.

    Learn as much as you can about budgeting and military money through your installation’s Family Readiness Center

    When you’re new to the military lifestyle, things like pay, basic housing allowance (BAH), and benefits can be really confusing. Many Family Readiness Centers on base have a variety of resources to help you understand your spouse’s pay, allowances, and deductions. Additionally, these groups can also assist you with budgeting and other finance related classes to help you plan and prepare for the days and years ahead. Understanding your spouse’s Leave and Earnings Statement (LES) is a great starting point to determine how much money is coming in and out of your household before other expenses.

    Get familiar with military tax credits

    To help offset the common financial burdens for military families, Uncle Sam offers service members and their families several tax breaks. Specifically, the Military Spouse Residency Relief Act exempts military spouses from having to pay state taxes simply because their spouse is stationed there. The only state military and their families are required to pay taxes in is the state in which they’ve set up legal residence. If you need help understanding which credits apply to your situation, most military bases offer free tax preparation services and consulting through the Volunteer Income Tax Assistance program.

    Set up life insurance

    As a new military spouse, the last thing you want to think about is you or your loved one passing unexpectedly. In the unfortunate event that does happen, make sure your family is able to survive financially. This can be ensured for you and your spouse by enrolling in the Servicemember’s Group Life Insurance (SGLI) and Family SGLI. This insurance is inexpensive and easy to enroll. Plus the payment will be automatically withdrawn from your spouse’s pay. Check his or her LES to ensure that premiums are being deducted.

    Save for retirement even if you’re not working

    Frequent moves and career changes absolutely make it hard to save for anything let alone retirement, but it’s still essential to prepare. Some military spouses find themselves prioritizing their spouse’s retirement plan over theirs. But don’t make this mistake because preparing for your own retirement, regardless of whether or not you’re currently employed, is just as important. If you are employed, contribute to any employer retirement plans like a 401(k). Be sure to ask about employer matching options which allows you to maximize your contribution. Or, an Individual Retirement Arrangement (IRA) is another great option whether you’re employed or between jobs. Are you self-employed? Consider opening a Simplified Employee Pension, Simple IRA, or Solo 401(k).

    On the flip side, make sure your spouse is contributing to his or her Thrift Savings Plan (TSP), which is the government’s form of a 401(k). Consider this: According to the Federal Retirement Thrift Investment Board, if you start contributing 10 percent of your paycheck to your TSP when you are 25 years old, then you’ll have $1 million saved for retirement by age 65. Comparatively, if you wait until age 40 to start contributing 10 percent then you’ll have a about $300,000 saved by age 65. The numbers are clear. Starting to plan for retirement now can make a world of difference in living comfortably later.

    Prepare for the inevitable rainy days

    Whether it’s stowing away for the day when your spouse is ready to transition out of the service, ensure you have the cash needed before reimbursement for your next permanent change of station (PCS). It’s important to have some cash saved up for the inevitable rainy day. This will prepare you in advance for a repair on your car or home. Having the money on hand in case you need to fly home in an emergency is a life saver. Make sure that you and your spouse are saving a few hundred dollars each month to prepare. If you never need it, great! But if you do, it’ll put a lot less strain on you, your spouse, and your marriage to know that you have cash on hand when the unexpected happens.

    As a new military spouse navigating the sometimes complicated military world, remember that you’re not alone. In addition to the resources listed above, there are endless military spouse-related blogs, magazines, online forums, and Facebook groups available to engage with other military families. They have been in your shoes and can offer you guidance and support when you need it. To start, take the steps in this article to ensure you and your family are taken care of financially. Welcome to the military community!

    About The AuthorKristen Baker-Geczy is a communications specialist, active duty military spouse, and former MWR marketing coordinator. She was also deployed to Southwest Asia as an Air Force contractor.

    Written by Team