Preparing for Deployment: Creating a Financial Strategy
As with many things during deployment, the way you handle finances has to change right along with the change in circumstances. There is more money coming in, responsibilities for paying bills may shift, you have to make sure you have a power of attorney so you can act on behalf of your spouse, and your insurance needs shift. Even though there are lots of other things to take care of during the time leading up to deployment, taking the time to create a financial strategy with your spouse will set your family up for success by both managing expectations and making sure all of the little details are in place. To help you get started, I’ll give you my advice as well as words of wisdom from other seasoned spouses. And, you’ll also find eight tips from an experienced USAA representative.
My advice is to remember is that you still must maintain a budget. Even though you are going to have extra money from separation pay, hazardous duty pay, combat pay, etc., and a lot of it untaxed, don’t forget you must maintain your budget. If you stay within your means, you may even be able to pay in full for that romantic getaway upon your service member’s return.
I spoke with several individuals whose spouses have retired from active duty and here are their words of wisdom:
The key to success is having a budget and acting like the extra pay isn’t even there because you become accustomed to living with what you have available. —Cora
Ask your spouse for all life insurance and benefit information and ensure the beneficiaries are current and that the policy covers everything you are paying for even when the service member is in a combat zone. Make certain you have a copy of the paperwork BEFORE the service member deploys. Check your insurance policies to include renter’s insurance as some insurance companies do not cover loss of property when the service member is deployed to a war zone. —Anne
It is imperative that the general power of attorney includes finances and is current. —Carina
Very important to stick to a budget even with extra pay. —Vicki
Another piece of advice that we all agreed on was to ensure that not only do you have a budget, but you have a list of goals or a designated purpose for the extra money gained due to deployment. It works out well when you have similar goals and don’t spend like you have it before you receive it.
I also spoke with Deanne Funkhouser with USAA. She has worked with military members and their families for over 30 years. Here are some of her words of wisdom:
Remember the Servicemembers’ Civil Relief Act (SCRA). The service member should contact anyone with whom they have a loan or credit card. Interest rates will be lowered to 6% during deployment.
Make sure the beneficiary is current on life insurance, investments, etc.
Provide spouse with passwords/access on accounts to be used with the power of attorney.
Think about online bill pay so you do not miss any payments.
Have a communication plan with goals and a budget.
Head retail therapy off at the pass. Unless that is on the goal list.”
Ask about the Savings Deposit Program (SDP)
-DOD Savings Account
-Eligible at 30 days on the ground
-Earns 10% interest
-Deposit up to $10,000
-Draws interest for 90 days after return
Use additional money made during deployment to pay bills, build retirement, or set up an emergency fund, but have a plan.
After gathering together everybody’s suggestions, one main tip rings true across the board: have a plan. Deanne is a Navy brat and recalls, “My Navy father always credited my mother for not getting them in debt while he was gone for six months on the submarine by sticking to a budget and a plan.” My mother told my best friend when she first got married, “If you receive extra money or a raise put that in a separate account and save it. Live within your means, especially in a two income household. Don’t become dependent on both incomes. Even setting aside an amount as small as $100 a month will accumulate to $1200 in a year.
You can be successful even in a stressful situation if you have a plan and stick to it.
Can you add any tips that have helped you be financially successful during deployment? Have you ever used the extra money to make a special purchase or go on a trip?