In honor of Memorial Day, we interview our listener Johnny who is a member of the Air Force, working in the finance office.
Members of the Armed Forces have their own set of challenges when it comes to their finances. Many recruits are fresh out of high school and learning to manage their finances is just one of the new arenas they find themselves in.
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As a new recruit, most of the day to day living expenses are covered, housing, meals, and health care so a lot of their income is disposable and they make the same mistakes a lot of young people make when they suddenly find themselves with some money. Buying expensive cars, fancy gadgets, nice (well earned) vacations dinner out when they tire of eating the same thing on a ten day rotation. The military does provide some personal finance classes but they’re voluntary.
The military does provide investment options. There is the TSP which is similar to a 401K program and subject to the same caps as the civilian sector. Military personnel are also given a pension. After twenty years of active duty, they receive 50% of their base pay. Some states don’t tax retirement income so this is something for members to consider when deciding where to live after retiring.
The GI Bill is another program available to members. It helps to pay for college and provides a stipend to help cover living expenses.
For deployed members there are some added financial benefits that are location driven including hostile fire pay, combat tax exclusion, and family separation pay.
Johnny’s final advice to his fellow military members is to know your benefits and if you have a question, ask someone.
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Thank you to Johnny and the millions like him for serving our country.
TSP: The military’s Thrift Savings Plan
GI Bill: The military’s college payment plan