Financial education is the first line of defense for active duty members and their families. There are many things to organize before deployment.
Financial Literacy Tips for Active Duty Service Members
1. Build an Emergency Savings Fund
The fund should contain three to six months of living expenses. Include at least $2,000 extra to deal with car repairs, plumbing leaks, and other unexpected bills.
2. Create or Update a Will
Nobody likes to prepare for the worst, but what will happen to your loved ones, property, and personal possessions if you do not have a plan? Drafting a will doesn’t have to be complicated. A will allows you to provide details on how you want your property and personal belongings to be distributed, name trustees who will manage your estate and care for your dependents (if applicable), and provide instructions for handling medical situations on your behalf if you are unable to make decisions.
Did you know your military legal service office can assist you at no charge? If you already have a will, make necessary changes and updates.
3. Appoint a Power of Attorney
Your power of attorney should be someone that you trust that can conduct business on your behalf while you are away, such as a family member or spouse. This person can make transactions that would normally require your signature. There are several types of documents that apply to different situations, such as financial and healthcare matters. Your legal service office can assist you with choosing and completing the correct forms.
4. Organize Your Finances
Financial Bills: Service members are responsible for their household expenses while they are deployed, such as rent, mortgage payments, car payments, credit cards, etc. Before deploying, make arrangements for these payments. You may wish to have your power of attorney handle your finances while you are deployed or you can set up automatic payments through your online checking account.
If you are a single service member, eliminate rent and utilities by leaving your possessions with a close friend or family member. Consider a commercial storage unit and rental insurance to protect your belongings as an alternative if this is more economical.
Direct Deposit: Direct deposit is now mandatory for your military pay. Direct deposit will enable you and family members to have easier access and more control of your funds. Speak with your pay office, bank, or credit union for further information.
Notify Creditors and Other Financial Institutions: Provide them with your new contact information. If you are traveling overseas, speak with your creditors so you can use your cards for emergencies in your new location. If you’re married, make sure both spouses’ names are on all accounts. If you’re single, provide the information to a responsible friend or family member entrusted with power of attorney.
Income Tax: If you will be deployed when your taxes are due, decide in advance how income taxes will be filed and who will do it. You may wish to file for an extension through the Internal Revenue Service before you are deployed.
Update Insurance: This may include investigating special dismemberment benefits available on your life insurance policy and reducing or eliminating coverage on cars that won’t be driven while you are deployed. Notify your insurance company if your car will be placed in storage and ensure your license plates and inspection stickers are up-to-date. If you decide to place a non-operational status on your vehicle through your DMV, you must do so on or before your vehicle’s registration expiration date.
During Deployment: You may be eligible for military discounts and benefits, such as lower credit card interest rates. Research financial products that you may need, including credit card and loans benefits.