7 Financial Moves to Prepare for Before You Separate from Active Duty - by Kelli Brewer
7 Financial Moves to Prepare for Before You Separate from Active Duty
Separating from active duty can give you a sense of freedom, but sometimes all of that choice can be overwhelming. For instance, many young veterans can feel lost when it comes to figuring out their finances, especially with BHA and other active-duty compensation out of the picture.
Preparing for your financial future doesn’t have to be so confusing, however, if you just know a few steps to take. So, if you are a veteran who has recently separated from service, or if you are active duty, here are some financial matters to focus on first, courtesy of Women Veterans of West Texas.
Are you eligible for VA benefits? If so, you can take advantage of several perks that will further your financial future. There is career counseling, help with tuition, and help finding the right school for your interests. Schools like WGU allow you to use the GI bill benefits. Your eligibility and the amount of assistance available depend on several factors.
An advanced education allows you to pursue a new job and new goals, so be sure to weigh your options. Do you love computers? You can pursue a lucrative career in information technology. That’s just one idea; think through what appeals to you and explore the possibilities.
After your separation, you may not be eligible for government-sponsored healthcare benefits. While some retired and qualifying veterans may still be covered and may be able to seek out physical and mental health support from VA hospitals, others will be left paying for those healthcare expenses on their own. So, be sure to research your own health insurance options.
Living without BHA can put added financial stress on young veterans and their family members. So before you separate from the military, you should figure out how much you can reasonably afford to spend on housing. Experts at CNBC recommend spending no more than 30 percent of your income on rent or mortgage payments, so try to keep this in mind if you are planning a move.
If you are reading this before your actual separation, you should think about setting aside a portion of your income in an emergency savings fund. Putting anywhere from three to six months’ worth of expenses into a savings account can provide a financial cushion if it takes longer to find a new job or if an emergency expense comes up, like home repairs or an illness.
Another smart move you can make with your remaining active duty paychecks is to start paying off some debts. Knowing the difference between good and bad debt is important, so research the differences before you begin paying yours off. For example, it’s always wise to pay off high-interest credit cards, but it may be best to contribute to your emergency or retirement savings before you put money towards paying off a mortgage.
Speaking of retirement savings, this is another crucial task you need to check off of your financial to-do list. As an active duty member of the Armed Forces, you should be aware that you have contributed to the Thrift Savings Plan, which means you already have a headstart on your retirement planning. You just need to be sure that your future investments and contributions are thoughtful enough to help you maximize your assets during retirement.
Depending on how long you have served, you may be required to complete curriculum requirements under TAP, or the Transition Assistance Program. While this program may seem like just another acronym or requirement to check off your separation list, the included curriculum can actually provide some insightful resources that can help you and your family better manage your finances.
Pay attention and take notes so you can bring home bits of information or ideas that will make maintaining financial stability less stressful. For some added help with your budgeting efforts, look for apps and tools that will make managing expenses easier.
Transitioning to civilian life can be stressful and challenging for veterans of all ages, but this process can also be freeing. As long as you take the proper steps to stay in control of your finances, you should be able to begin this chapter of your life without worrying about money. That way you can focus on looking forward to a future full of potential.
For more ideas, events and information for veterans, connect with the Women Veterans of West Texas!
Photo Credit: Unsplash
Kelli Brewer writes for DeployCare.org, where she shares resources and solutions for issues commonly faced by military families. She is proud of her military family and is passionate about supporting other military families through her website.
Thank you Kelli for this very helpful article! I believe we can ALL benefit from this advise.