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Military Financial Preparation: An Introduction

Updated on April 21st, 2023

MyMilitaryBenefits

Utilize Military and Civilian Benefits in Your Financial Preparations

Understanding your military pay factors, military benefits that can save you money, and tricks to reduce spending is crucial for financial planning. Understanding your finances and developing a healthy cost-saving mindset can help you throughout your military career.

Understanding Your Military Pay Factors: Types of Military Compensation

Basic Military Pay – Determined by rank and time in service. Find updated military pay charts here.
Basic Allowance for Housing (BAH) & Basic Allowance for Subsistence (BAS) – Determined by pay grade and registered dependents. BAH rates and calculator and BAS overview.
Other allowances include Basic Allowance for Subsistence, Basic Needs Allowance, Dislocation Allowance, Clothing Allowance, and travel allowances.
Military education benefits are another form of compensation; most military branches offer Military Tuition Assistance which can be used in place of the GI Bill to save that benefit for when the servicemember leaves the military.

For more info on DFAS, please view our Military Pay Guide.

Save For Retirement Early with the Thrift Savings Plan (TSP)

The Thrift Savings Plan is a contribution plan and is designed like a 401(k) or Roth 401(k). The TSP offers many paths for investing in your retirement.

Know Your Legal Protections

Service Members Civil Relief Act (SCRA)

SCRA protects active-duty military members when breaking rental leases if Permanent Change of Station (PCS) orders are received, break a car lease and/or cell phone contract, and protects against certain legal actions during deployments.

Extra Ways to Save

Banking and Insurance

USAA – Free checking and savings accounts with no minimum balance fees, free checks, free debit card rewards, free overdraft protection, free web bill pay, no ATM fees, early availability of payroll with direct deposit, and government shutdown protections.
Wells Fargo – Up to four U.S. domestic and four international ATM cash withdrawals at any ATM each month at no charge (with direct deposit), home awards for disabled veterans, and hands-on banking a free resource for career transition, deployment, military retirement, PCS, and military home buying.
US Bank – No ATM Transactions fees, overdraft protection with no-fee transfers, free mobile check deposit, and family member accounts with no monthly maintenance fee. More benefits can be found here.
Armed Forces Insurance – Auto insurance discounts, business insurance, renter insurance, and more.

Purchasing a Vehicle

Take advantage of discounts offered to the military community by car companies. Find car and truck discounts for military and veterans here.

Travel and Recreation

Morale, Welfare, and Recreation program (MWR) – Located on base or online offers discounts on tickets and entertainment all over the world.
American Forces Travel – Access to discounted rates on airfare, rental cars, vacation packages, cruises, and more.
Armed Forces Vacation Club – Has an “R&R” program with destinations around the world that the military community can access starting at $359 per week.

Military Discounts

Discounts offered by several types of companies can be a great way to save money. Check out our discount section to find a verity of discounts.

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Differences Between Home of Record and State of Legal Residence

Your home of record as listed in your military records is very important; some states offer veterans education benefits or other compensation for military service, but only to those who entered the military from that state as their home of record or listed the state as the official home of record. Not all state-level benefits are offered conditionally in this way, but enough of them are that it warrants mentioning here.

Home of Record (HOR) – The State you first enlisted or commissioned. HOR is used for travel allowances when leaving the military.
State of Legal Residence (SLR) – The State you consider home and where you intend to live after leaving the military. It is where you will pay taxes, register to vote, and get a driver’s license. The state of Legal Residence can change due to orders.

Knowing the basics of your military pay will help you plan for a successful financial future. By pairing military benefits with civilian benefits you can maximize your budget. Always make sure to plan for curveballs by practicing good saving habits.