Budgeting and Saving for Military Life

• Be aware of what you’re earning each month. Check your LES to determine your basic pay, housing or subsistence allowances, entitlements and any special pays.
• Review your spending for the last 30-60 days by looking at your credit card activity and bank statements. Track expenses such as housing, food, transportation, subscriptions, debt payments and more.

After looking at the whole picture of your finances, look for two to three categories where you can reduce expenses. For example:

• Subscriptions and recurring charges: Cancel unused subscriptions, rotate between streaming services or downgrade plans where possible.
• Food and groceries: Plan meals three to four days at a time, build them around items you already have and save by shopping at your local commissary and sticking to your list.
• Shopping and spending: Avoid impulse purchases, set a spending limit or shop secondhand for big items.

Pro tip: There’s no shortage of ways to spend less. From DIY hacks to utility updates, see all the ways you can save.

Consistency matters more than perfection. Here are some common budgeting strategies to try:

• 50/30/20 budget: Split your earnings into three categories — needs (50%), wants (30%) and savings and debt payoff (20%).
• Zero-based budget: Make a plan for every dollar earned. Assign each one a “job,” whether for spending, saving or paying bills.
• Pay yourself first: Set a savings goal and automatically contribute to that goal at the start of each pay period to avoid leaving “extra” money in your account. This approach can help fund emergency savings, retirement contributions or short- and long-term savings goals.
• Cash budget: Set aside cash for specific spending categories — like groceries or entertainment — to help control overspending. Once the cash is gone, refrain from spending in those areas until your next budget cycle.

Creating a budget is not a one-time task. Check in on your finances weekly or monthly and adjust your plan as your needs change.

Pro tip: Track your income and expenses, monitor spending trends and make budget adjustments monthly, quarterly or yearly to reflect your current needs.

Using credit cards responsibly is one way to build a strong credit report, which is important for buying a home or taking out a loan. However, relying on credit too much can lead to debt. Review your credit card statements carefully for fraudulent activity and to confirm your payments are being properly applied and recorded. Make your credit card payments on time, every time and ask if you qualify for hardship or rate deductions.

Pro tip: Automate payments whenever possible to make sure the right amount of money goes to the right destination without relying on memory. For any payments that can’t be automated, set up reminders on your phone or planning app so you never miss a due date.

Military service provides more than a paycheck. There are numerous health, education, career, and recreation resources available to help you save money and make the most of your budget. Here are just a few:

• Commissary and exchanges: Shop daily essentials, groceries, electronics, name brands and more — tax-free and at a discount.
• American Forces Travel: Get discounted rates on hotels, flights, rental cars, vacation packages, event tickets and more.
• MWR recreational lodging: Book military-exclusive cabins, campsites, hotels and more at a reduced price.

Emergency funds are designed to help cover unexpected costs without relying on credit or taking on debt. A solid emergency fund should have three to six months of expenses to account for costs, like medical bills, accidents or travel. Keep these funds in an account with easy, penalty-free access and set up automatic transfers to a dedicated savings account to build it up over time.

A sinking fund is money that’s set aside a little at a time for a specific upcoming cost, instead of paying the full amount all at once. It’s a way to “prepay yourself” over weeks or months for things like holidays and birthdays, child care, school costs, additional uniform and gear costs and vacations.

Clear goals make saving easier. Try these strategies:

• Pick one goal to focus on based on your needs — like a PCS buffer, debt payoff or holiday spending.
• Be specific when setting financial goals. Instead of saying you want to “save more money,” identify a target amount and set a deadline. Using the SMART goal formula can help you create goals that are specific, measurable, attainable, realistic and time-bound.
• Use separate savings accounts and keep things labeled to track your progress and avoid dipping into savings. Start with your emergency fund and add accounts for two to three short-term goals — and opt to bank with an agency that doesn’t charge account maintenance fees.

• A Thrift Savings Plan lets service members contribute from their pay to build long-term retirement savings. If you’re in the Blended Retirement System, the government will match your contribution up to a certain point.
• The Savings Deposit Program lets eligible deployed service members deposit up to $10,000 and earn 10% interest while serving in a combat zone.