It’s no secret that most couples don’t enjoy talking about money, but not addressing this major part of your relationship can cause serious stress. A recent study found that about 30 percent of couples disagree on finances at least once a month. For military couples, who have different financial considerations than their civilian counterparts, it is especially important to check in regarding things like budgeting, life insurance, and preparing finances before a deployment.
In honor of Financial Literacy Month, here are some tips for military families looking to get their finances organized.
Have a basic budget talk:
Sitting down and scheduling a time to talk about money can set you and your spouse up for success in the long run. A strategic budget can help you achieve your goals, such as buying a house or sending your children to college. Discuss what you are projected to be making and budget accordingly, considering how you will save for an emergency fund or short-term money goals like buying a car. It may be a good idea to set up a separate account and deposit a set amount each month to keep yourself organized and also avoid the temptation of spending.
This conversation is especially important to have before your spouse deploys for active duty. Make sure both of your names are on all bank accounts so the spouse that is staying home can access it while the servicemember is away. Also, be sure to share where to find important documents such as wills, insurance documents, and banking and loan documents. This may seem obvious, but it’s easy for couples to be complacent about their financial situation especially if one spouse leads the money planning.
Understand finances before a deployment:
The time before a deployment is a great opportunity to step back and assess your finances and come up with a plan which allows for a smoother transition for all members of the family. To start, consider items that are not necessities when the servicemember is away, such as extra cell phone lines, cable TV, or auto insurance.
It is essential that the servicemember in your life understand their pay and allowances before a deployment, so you can plan accordingly as a couple. Different assignments may provide more income, such as hazardous duty pay. If your spouse is in a combat zone, a portion of income is tax-free, leading to additional cash flow for the family. While it may be tempting to spend this newfound cash, this is a good chance to pay down any debt or continue to save towards your larger financial goals.
When preparing for a deployment be sure to discuss a contribution plan in regard to the servicemember’s Thrift Savings Plan. While deployed in a combat zone deferrals and limits for contributions for the Thrift Savings Plan change. The limit for employee deferrals is currently $18,500, and the maximum amount a servicemember can contribute from all sources is $55,000.
Prepare for the future now:
For many couples, it can be easy to put off looming financial issues such as life insurance and retirement, but you truly cannot afford to wait on these important decisions. Life insurance in particular can be a hard topic to navigate as few people are comfortable talking about what may happen when they’re gone. In fact, of those surveyed in the 2017 Insurance Barometer Study, 1 in 10 didn’t know how much insurance their spouse had, if any.
It is absolutely essential to maintain open lines of communication when it comes to something as important as determining the appropriate amount of insurance that would help your family not only survive–but thrive– in the event of your passing. It can be easy for servicemembers and their spouses to be lulled into a sense of complacency because they already receive Servicemember’s Group Life Insurance (SGLI) through the military. SGLI ends when the servicemember leaves the military, so this is not a viable option for long-term protection. When discussing what policy is right for you and your spouse, whether it be term life or whole life, be sure that both partners are insured. As a military spouse, you bring a significant and important contribution to your family that should not be overlooked.
Talking about your finances doesn’t need to bring your military family stress. With open communication and a strategic plan for your future, you can ensure that you stay on budget and save for all of life’s big events.
Brittany Benassi, CFP, is a financial planner at AAFMAA Wealth Management and Trust, and a military spouse.