BUCKLEY AIR FORCE BASE, Colo. --
Service members file for bankruptcy at a higher rate than their civilian counterparts.*
The leading cause of bankruptcy among the civilian population in the U.S. is medical expenses. However, for those wearing the uniform, this falls to consumer debt.
Taking the time to create a financial spending plan can eliminate many of the common risks that lead to debt and make you a security risk as a result.
The frightening reality is many adults are ill-prepared for financial emergencies. Forty-nine percent of military families have less than $5,000 in savings.*
Whether there was a family emergency in the past, education expenses, health care or other major financial hardships, it is time to take a step back and see what can be done before you start feeling out of control.
There are many service members who turn down opportunities, not because they don’t want to, but because they simply cannot afford to. Think about it this way: if you had to fly back to your hometown tomorrow for a family emergency, do you have enough in savings to do so or would you have to reach out for help?
“Having an awareness of what your spending habits are and what the actual dollar cost of those habits are is the first step in being able to plan successfully for your financial future,” said Morgan Copeland, 460th Force Support Squadron financial advisor. “The recent shutdown highlights that we must all be prepared for the possibility of not having a paycheck one day and how well we have planned for that is going to be what will hopefully get us through the situation.
“Having $1,000 in savings is a good place to start, but three to six months of living expenses and debt payments should be the goal,” added Copeland. “Too many service men and women end up in a debt trap because of short-term financial need due to a lack of emergency savings.”
Many people rely on their paychecks to come on time. This is a dangerous mindset as plans change and there are some circumstances beyond their control. The introduction of the financial touchpoints as outlined in National Defense Authorization Act 2016 introduces and reinforces the idea of personal financial management and responsibility as a readiness issue. This is why each service advises their members have the foresight to save.
With the recent government shutdown, the Air Force was lucky enough to have funding allocated, however our Coast Guard brothers and sisters haven’t been as fortunate. This is a prime example of why it is crucial to take care of your finances. According to the Blue Star Families’ annual Military Family Lifestyle Survey, finance has been ranked number two in stressors faced by service members.
To alleviate this stress, service members must maintain a mission-read mindset, the Department of Defense offers free, certified financial counselors to provide confidential financial education support.
Financial stress can bleed into every aspect of someone’s life, but making a few more conscious decisions can keep it from doing so.
When it comes time to pay debts, make it a priority to pay them all off at once versus making payments. Structure your debt, then avoid making new debt. Avoid falling for traps that place you in a high-interest rate loan because you’re essentially wasting money by borrowing at an extreme cost.
Start asking yourself questions to see if your financial position is linked to spending habits, such as if it’s something you need or would it be an impulse buy. If it is something that falls within your budget priorities then another trick is to do comparison shopping before purchasing.
Shopping isn’t bad – it establishes a credit history. Just make sure you’re still saving and planning toward a retirement.
If you find yourself in a less than ideal financial situation, look into what resources are available. Did you know if you are active duty, there is a federal law which allows you to reduce your rate of interest to a maximum of 6 percent on pre-existing loans through the Service Members Civil Relief Act?
There are also several free classes, not only for budgeting and saving, but for investing towards a brighter, stress-free retirement.
Being financially responsible doesn’t mean you have to stop living, just live within your means.
Contact the Airman and Family Readiness Center at 720-847-6681 to set up an appointment to get more information.
*According to the 2017 Blus Star Families annual Military Family Lifestyle Survey