If you are like most service members preparing for deployment, you are probably spending a significant amount of time ensuring you have the right training and equipment for your mission. However, it is equally important that you prepare your family for the deployment, which includes getting finances ready. While this may seem daunting, focusing on some basic areas will leave your spouse and children on sound financial footing while you’re away.
Your budget — the cornerstone to success.
One of the basic building blocks for financial security is your budget. Pre-deployment is an excellent time to develop or review your budget. Start with the basics: sources of funds, uses of funds, assets on hand and obligations. Determine how you will use your income to meet your obligations. If there’s a mismatch, review how you are using your funds and assets to see what adjustments can be made to address shortfalls. Deployments often provide a savings opportunity because you may be able to suspend some services, such as telephone and cable while you’re deployed.
People often incorrectly view the budget only through the lens of tracking spending, which misses the key purpose of budgeting:
you should actively manage your scarce resources and not fall prey to happenstance spending. Your budget provides the path for meeting obligations and achieving financial goals.
Special and incentive pay.
You may earn a variety of special and incentive pays while you are deployed. According to the Defense Finance and Accounting Service, there are more than 60 types of special and incentive pays. Importantly, these are often tax advantaged. For this reason, it is important for you to determine which apply to your circumstances. Some of the more common ones include: Hardship Duty Pay, Hazardous Duty Pay and Imminent Danger Pay. You may also qualify for Family Separation Allowance.
A good place to begin your research is with your local finance office. The DFAS Special and Incentives Pay website can also be useful. The purpose is to know what you are entitled to and then be sure that you receive it. In addition, you should factor these into your budget for as long as they apply. They can help you build an emergency fund, pay down debt or help you fund long-term financial goals, like retirement or a child’s education.
Consider the Savings Deposit Program.
The Department of Defense established the SDP asa way to provide service members in designated combat zones the opportunity to build their savings. Under the SDP, a deployed service member meeting specific criteria can deposit up to $10,000 and earn 10% interest annually. This is an exceptional rate of return fora very safe investment. For more information on the program, see the DFAS SBP page.
Review account authorizations.
Depending on the deployment location, you may not have easy access to your financial accounts. Before you deploy, consider identifying a trusted person – a spouse or parent, for example, and granting them access to your accounts in case you need to conduct a transaction but don’t have access. Financial companies have different requirements and forms so check with yours; you may even be able to tailor the amount of access to suit your needs. You can limit it to viewing account balances, grant full privileges or something in between.
Review your protection plans.
Another important building block of financial security is protecting assets. This includes having the right amount of homeowner’s or renter’s insurance, auto insurance and life insurance. Regarding the latter, service members often assume that SGLI is enough to meet their needs. However, if you have a family, the reality is that you maybe underinsured if you own a home and have children that you want to put through college. If you need to supplement your SGLI, consider term policies from a reputable company.
Identify, gather, and safely store important documents.
If anything were to happen to you during deployment, your survivors would need access to some basic documents to receive any benefits earned through your service. These include marriage or divorce documents, birth certificates, legal documents (wills, powers of attorney, trusts, estate plans), Social Security numbers for your spouse or dependents, insurance policies, financial statements and account passwords. Gathering and safely storing these will greatly assist your loved ones should the need arise for them.