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7-step plan to fund your military transition

Ryan Guina
by Ryan Guina
June 23, 2022
military transition

Many veterans face financial challenges during their military transition, but careful planning can ease the process. Be aware that it takes time to adjust spending patterns and save the money you need during your transition.

These tips can help you make a successful transition from service.

1. Understand how monthly expenses will change

Review your budget to understand how your transition will impact your expenses. According to the Bureau of Labor Statistics, Americans’ largest expenses are housing, food, transportation and health care. Two of these expenses might be directly impacted by leaving military service. For example, will you lose access to base housing? Will you have continued access to TRICARE, or will you need to find an alternative?  Run the numbers to have a realistic understanding of how these expenses might change.

2. Make a list of anticipated one-time expenses

You may face one-time expenses after leaving the military, such as additional moving costs beyond what the military provides or purchasing a professional wardrobe or new gear for your civilian job. Other examples include rental or utility deposits, down payment on a house, travel, tuition or related expenses.

3. How you can ease your military transition

The first step in preparing a battle plan is understanding your objectives. The same thing applies to your post-military finances. You can start preparing for the transition now that you have a good idea of your future expenses.

4. Increase income, decrease expenses

These actions work in tandem to improve your situation. You might be able to generate extra income by consulting, taking a part-time job, working in the gig economy or even applying for unemployment. Reducing expenses eases the demand on your finite funds. But instead of focusing on cutting the occasional latte, you’ll get quicker results by trimming your highest costs, such as housing, food and transportation.

5. Beef up your rainy day fund

Your emergency fund protects you from unexpected expenses. Many financial experts recommend saving three to six months of expenses in your rainy day fund. However, you might feel comfortable with more or less, depending on your situation.

RELATED: OPINION: How to increase your retirement savings with TSP

Work backward to determine how much you need to save. Start with your bare-bones living expenses (rent/ mortgage, food, utilities, loans, other regular bills), then consider how long you would feel comfortable going without income. Multiply that by your bare-bones expenses to come up with your number. Even if you don’t reach your savings goal before your separation date, any savings are helpful.

6. Reduce debt before military transition

Debt reduction is powerful. Decreasing your monthly expenses reduces your monthly footprint and allows you to have a smaller emergency fund.  Which debt to tackle first? There are two schools of thought: Mathematically, paying extra toward the debt with the highest interest rate will give you the best overall return. However, paying off your lowest balance first gives you momentum and an emotional win.  Paying off your smallest debt first also removes one of your fixed bills each month. Having one less payment allows you to scale back if necessary or redirect that payment amount to your next smallest bill, helping you to repay it more quickly. This is the Debt Snowball method, popularized by Dave Ramsey.

7. Give yourself grace – and a buffer

Leaving the military is full of unknowns, and perfect planning simply isn’t possible. Don’t be hard on yourself when unanticipated situations arise – because they will. These unforeseen situations illustrate why having a buffer is essential. If possible, add 5% to 10% to the numbers you arrived at earlier. This buffer gives you wiggle room when these unanticipated situations arise.

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Tags: financeMilitarymilitary relocationmilitary transitionrelocationTransition
Ryan Guina

Ryan Guina

Ryan Guina is the founder of TheMilitaryWallet.com and CashMoneyLife.com. He is a writer, small business owner, and a military veteran. He currently serves in the Air National Guard.

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